Driving innovation

for an inclusive and

sustainable financial
future

Annual Report
2024
 HH Sheikh HH Sheikh
Mishal Al-Ahmad Al-Jaber Al-Sabah Sabah Khaled Al-Hamad AL-Sabah

Emir of the State of Kuwait Crown Prince of the State of Kuwait

NBK at a Glance
Guided by our legacy of trust and a deep sense of responsibility to our stakeholders, NBK has consistently
strived to drive innovation across all facets of its business to deliver sustainable value for all. In 2024, NBK made
significant strides, marked by a steadfast dedication to fostering a more inclusive and sustainable financial future.
Our unwavering commitment to excellence and forward-thinking strategies has enabled us to navigate challenges
and seize opportunities, ensuring that we remain at the forefront of the banking industry.

Our commitment to a more inclusive and sustainable financial future is evident in our innovative initiatives and
solid financial performance in 2024. We have focused on empowering the next generation of customers, cultivating
leadership, pioneering sustainable finance, leading in environmental transparency, fueling economic growth,
building a thriving workforce, and investing in our communities. Our efforts reflect our dedication to creating a
positive impact and driving progress for an inclusive and sustainable financial future.

Operational Performance and Profitability

76,948
130,926
122,249 72,317

4
Continents
117,943
68,155

8,294
Global Employees
2022 2023 2024 2022 2023 2024

Total Assets (USD million) Loans, Advances and Islamic

Financing (USD million)

74,217

1.34%
NPL Ratio 11,962
12,672
65,492
71,240

11,146

15.1%
Return on Average
Equity
2022 2023 2024 2022 2023 2024

Total Equity (USD million) Customer Deposits (USD million)

130.9
USD Billion Total 4,061
Assets
1,948 3,787
1,820

1,652 3,277

17.3%
Capital Adequacy
Ratio

2022 2023 2024 2022 2023 2024

Net Profit Attributable Net Operating Income (USD million)

to Shareholders (USD million)
About NBK
Founded in 1952 by a visionary group of Kuwaiti merchants with a bold mission to drive their nation’s economic growth,
NBK has become a cornerstone of Kuwait’s financial landscape, significantly contributing its economic prosperity. NBK was
the first national bank in Kuwait and the Arabian Gulf region. Today, NBK is Kuwait’s leading conventional banking group in
terms of assets, customer deposits, and customer loans and advances. As the first shareholding company in Kuwait and the
Arabian Gulf region, NBK has pioneered the region’s financial development.

NBK’s enduring success is built upon a foundation of stability and strength. The Bank has retained its core shareholder base
since inception. NBK’s shares have been listed on the Kuwait Stock Exchange since 1984, with a single shareholder, the
Public Institution for Social Security, owning more than 5% of the share capital (6.17% as of December 2024). NBK’s market
capitalization as of 31 December 2024 was USD 24.2 billion.

Over its 70-year legacy of trust, NBK has transformed into a global financial institution, with a strong presence across 4
continents and 13 countries, employing more than 8,000 dedicated professionals. NBK’s enduring success is underpinned
by its strong financial performance, robust balance sheet, and experienced management team.

NBK boasts a strong brand reputation as a leading financial institution in the MENA region, with robust business model. Its
commitment to innovation and digital transformation has enabled seamless banking experiences for its customers across
its global network. Furthermore, NBK’s focus on sustainability and corporate social responsibility has solidified its position
as a responsible corporate citizen.

Main Business Segments

Mission
• To deliver world class products
and the highest service quality to
our customers
Vision • To attract, develop and retain the
Values Consumer Banking
We aim to be best banking talent in the region • Passion
the trusted • To support the communities in • Integrity
bank of choice, which we operate • Conservatism
building on our • To adhere to our core values of • Knowledge
core values, Corporate Banking
passion, integrity, conservatism
people and and knowledge
expertise. • By doing so, we believe that
we will be able to achieve
consistently superior returns to
our shareholders NBK Wealth

Islamic Banking (through

subsidiary Boubyan Bank)
Contents

1 Strategic Review
04
06
10
Driving Innovation for an Inclusive and Sustainable Financial Future
Chairman’s Statement
Year in Review
11 Institutional Strength
12 Vice Chairman & Group CEO’s Statement
16 Market Outlook
20 Our Business Model
22 Strategy
24 Redefining Banking Experiences Through Digital Innovation
26 Operational Review
28 Group CFO’s Review
32 Key Performance Indicators
34 Risk Management
38 Cultivating a Culture of Excellence Through a Holistic HR Strategy
42 ESG

2 Governance
50
54
Board of Directors
Executive Management
60 Corporate Governance Framework
62 Board of Directors and Committee Meetings
64 Effective Implementation of the Corporate Governance Framework
69 Remuneration Policy and Framework
70 Internal Control Adequacy Report
71 Internal Control Review by External Party
72 Ethics and Professional Conduct
73 Stakeholders’ Rights
74 Group Risk Management and Group Compliance and Governance

3 Financial
Statements
118
120
Board of Directors’ Report
Independent Auditor’s Report
125 Consolidated Statement of Income
126 Consolidated Statement of Comprehensive Income
127 Consolidated Statement of Financial Position
128 Consolidated Statement of Cash Flows
129 Consolidated Statement of Changes in Equity
131 Notes to the Consolidated Financial Statements

1
 Strategic Review
At the heart of NBK’s strategic
vision lies a business model
that thrives on trust and
the creation of exceptional
and sustainable value for
all our stakeholders. We are
harnessing the unique synergy
of a leading digitally innovative
customer base franchise, a
skilled value-driven workforce,
a proactive sustainability
focus, and a disciplined
compliance and dynamic risk
management approach.

NBK Annual Report 2024

3
1 Strategic Review

Driving Innovation for an Inclusive

and Sustainable Financial Future
Innovation is a cornerstone of NBK’s success, permeating every It provided a comprehensive suite of services addressing the
aspect of its operations. From pioneering digital solutions and evolving needs of corporate clients, including dedicated support
developing innovative financial products to launching forward- for high-potential mid-sized corporate businesses. It also
thinking initiatives, NBK is constantly striving for excellence. In upgraded the Corporate Banking online platform, enhancing
2024, NBK proactively drove innovation to foster a more inclusive efficiency and client experience. These combined efforts
and sustainable financial future for all stakeholders, demonstrating across all business divisions have resulted in increased client
agility and resilience in navigating the evolving economic landscape satisfaction and strengthened loyalty, driving sustainable growth
and capitalizing on emerging opportunities. This section highlights for the Bank.
the Bank’s key initiatives in 2024, demonstrating its pursuit of an
inclusive and sustainable financial future. + Learn more about NBK’s Operations on pages 26-28

NBK’s initiatives focused on maximizing client value through Driving Innovation for an Inclusive and Sustainable Financial
tailored products and enhanced digital experiences, expanding Future by…
global reach into key markets to provide clients with diverse Expanding Global Reach
financial opportunities, securing a future customer base for the Building on its commitment to client value, NBK is also expanding
Bank by investing in youth segments, and driving sustainable its global footprint to unlock new opportunities for its clients
growth through its sustainable finance products and initiatives. while driving further growth for the Bank and its shareholders. The
NBK’s commitment to an inclusive and sustainable financial International Banking Group (IBG) is central to NBK’s expansion
future is further reinforced by its focus on its workforce and the strategy, leveraging NBK’s Singapore branch as an Asian hub and
community, recognizing that a thriving team is essential to its its French subsidiary for EU market coverage.
success, and a thriving community is integral to a thriving nation
and a sustainable financial future for all. Complementing this broader market reach, NBK delivered
tailored solutions to diverse client segments across its network
Driving Innovation for an Inclusive and Sustainable Financial in 2024. IBG launched targeted consumer banking propositions,
Future by… such as “Beyond” for upper-affluent customers in Egypt and
Maximizing Client Value “Privilege Banking” for affluent clients in Bahrain, demonstrating a
NBK is dedicated to maximizing client value by redefining the commitment to serving diverse client needs. IBG also supported
banking experience through innovative products and digital corporate and CRE activity across NBK’s network, facilitating cross-
solutions. This commitment is evident in the comprehensive border transactions through its UAE-based Centralized Syndications
range of new products and strategic initiatives implemented Desk. Furthermore, IBG collaborated with NBK Wealth to launch
across NBK’s various business divisions in 2024. new funds for HNWIs and institutional clients in Kuwait and KSA and
initiated Private Banking activities in KSA.
Consumer Banking significantly enhanced customers’ digital
experience, launching its new NBK Mobile Banking App with over
+ Learn more about NBK’s IBG on page 28
65 new features and optimizing the Weyay platform with intuitive
interfaces and youth-focused financial management tools. Likewise,
Driving Innovation for an Inclusive and Sustainable Financial
the newly established Retention Hub reinforced client relationships
Future by…
through proactive engagement and personalized support.
Securing a Future Customer Base
Beyond its global expansion efforts, NBK is committed to
NBK Wealth expanded its suite of offerings and diversified client
building a strong foundation for future growth by focusing on
portfolios in 2024, broadening access to Global Equities and
youth segments. While NBK is dedicated to delivering innovative
Fixed Income and launching new funds tailored for HNWI and
and inclusive financial solutions for today’s clients, it is also
institutional clients. It launched a new Discretionary Portfolio
strategically investing in youth segments to secure its future
Management (DPM) solution to optimize capital deployment,
growth. Weyay Bank’s growth since its launch in 2021, exceeding
and established a strategic partnership with JP Morgan Asset
projections fourfold, highlights the demand for innovative digital
Management to broaden access to selective investment products.
banking among tech-savvy youth. In 2024, Weyay catered to the
NBK Wealth also introduced the NBK Wealth App and enhanced
needs of youth segments by introducing innovative products,
its client engagement through initiatives like NBK Wealth House
including the Jeel Card, the SELECT Digital Prepaid Card for
View and Insights.
students, and the Saving Pot “Pro” promoting a savings culture
among youth.
Corporate Banking supported corporate clients’ growth and
Jeel, Weyay’s digital banking platform designed for young
financial stability by delivering customized solutions for managing
individuals aged 8-14, exemplifies the Bank’s commitment
cash flow locally and internationally through NBK’s network.
to investing in youth segments. With an engaging, user-

NBK Annual Report 2024

friendly interface, vibrant graphics, and interactive features, from NBK and partner organizations with essential leadership
Jeel empowered young clients to manage their finances skills, empowering them for future roles. Additionally, NBK Tech
independently. The Jeel Card, designed for this age group, Academy provided recent graduates with essential technical and
includes innovative features like “Quick Pay Request” and professional skills, successfully placing all participants within the
“Request Payment via Link”, fostering digital financial Bank’s data and digital divisions.
independence. Complementing these initiatives, NBK expanded
its Bankee financial literacy program, which aims to equip NBK supports employee well-being, creating an environment
students with essential financial skills, reaching 61 schools, where its people can thrive both personally and professionally. In
32,235 students, and 7,335 teachers in 2024. NBK’s youth- 2024, NBK implemented several initiatives to enhance employee
focused products and initiatives are driving financial inclusion as well-being. The November Health Campaign included specialized
well as cultivating a loyal customer base for the future. screenings, consultations with health experts, and a heart health
seminar at NBK’s headquarters. Furthermore, NBK prioritized
+ Learn more about NBK’s Consumer Banking on pages 26-27 work-life balance, implementing reduced working hours on
Thursdays. The innovative Well-Being Leave program was also
introduced, empowering employees to prioritize their mental,
Driving Innovation for an Inclusive and Sustainable Financial physical, and social health.
Future by…
Driving Sustainable Growth
NBK’s commitment to future customers is mirrored by its + Learn more about NBK’s HR Initiatives on pages 38-40
commitment to a sustainable financial future, demonstrated
through responsible financial practices that benefit stakeholders Driving Innovation for an Inclusive and Sustainable Financial
and drives long-term growth. The remarkable success of NBK’s Future by…
USD 500 million inaugural Green Bond, oversubscribed three Investing in Our Communities and Our Future
times, demonstrates this powerful synergy, championing The culture of excellence that NBK fosters within its organization
sustainable practices while simultaneously opening new avenues extends its reach to the communities it serves, recognizing that
for growth with diversified funding and improved liquidity. their well-being is integral to the Bank’s success. NBK believes
The successful bond issuance, with its proceeds allocated to that thriving communities contribute to a thriving Kuwait, forming
environmentally friendly projects, also underscores investor the foundation for an inclusive and sustainable financial future
confidence in NBK’s creditworthiness and its commitment to a for the Bank and its stakeholders. This belief is reflected in NBK’s
sustainable financial future. dedication to making a positive impact on society through its
robust Corporate Social Responsibility (CSR) initiatives. In 2024,
Throughout 2024, NBK led the way in sustainable finance, NBK’s community investments reached around KD 30 million (USD
establishing new standards with impactful initiatives. The Bank’s 97 million), a 9% increase from 2023. These funds supported
ESG Scorecard provided a structured framework for evaluating diverse programs focused on youth development, healthcare, and
climate change and ESG risks, enhancing transparency and environmental conservation.
supporting clients’ sustainability journeys. Furthermore, NBK’s
leadership was further underscored by being the first bank in Kuwait NBK’s dedication to a thriving Kuwait is demonstrated by the
and sixth in MENA to join the Partnership for Carbon Accounting Bank’s active contribution in financing transformative mega-
Financials (PCAF) in 2024, enabling the Bank to proactively manage projects as well as developing local talent through programs
risks and contribute to a sustainable financial future. such as the Tamakan Training Program, which equips recent
graduates with valuable professional skills. Furthermore, NBK
+ Learn more about NBK’s Sustainable Finance and ESG is committed to the Kuwaitization strategy, in alignment with
Initiatives on pages 42-46 Kuwait Vision 2035. In 2024, Kuwaiti nationals comprised 78.0%
of the workforce and 92.3% of new hires in 2024, demonstrating
NBK’s dedication to empowering national talent. By investing
Driving Innovation for an Inclusive and Sustainable Financial
in its communities and supporting the realization of Kuwait
Future by…
Vision 2035, NBK is actively contributing to a more inclusive and
Cultivating a Culture of Excellence
sustainable financial future.
NBK recognizes that sustainable growth is driven by its people,
its greatest asset. NBK is dedicated to cultivating a culture
of excellence by fostering a diverse, equitable, and inclusive + Learn more about NBK’s CSR Initiatives on pages 42-46
workplace where everyone can thrive and contribute effectively
to the Bank’s strategic goals. Reflecting this commitment, the
2024 NBK Rise second cohort equipped 25 high-potential women

5
1 Strategic Review

Chairman’s
Statement

Hamad Mohamed Al-Bahar

Chairman

Dear Shareholders, Investors and Partners,

It is with great pride that I present to you, on behalf of the Board
of Directors, the National Bank of Kuwait’s 2024 Annual Report
Our collective efforts and audited financial statements. This year’s report highlights
have yielded remarkable how NBK is “Driving Innovation for an Inclusive and Sustainable
Financial Future” through strategic initiatives, reflecting
results, reinforcing our our unwavering commitment to excellence, innovation and
position as a leader in the sustainability.
financial sector.
As we review the accomplishments of the past year, the Board
is immensely proud of NBK’s achievements, prioritizing strong
corporate governance and delivering sustainable value to all
stakeholders. Our collective efforts have yielded remarkable
results, reinforcing our position as a leader in the financial sector.

NBK continued to expand its 2024 was a year of significant milestones for NBK, with the
digital offerings, introducing a issuance of NBK’s debut Green Bond, the successful expansion
of Weyay, the introduction of innovative and sustainable financial
range of innovative products solutions, the enhanced accessibility and inclusivity for a broader
and services that cater to customer base, and the capitalization on growth opportunities in
the evolving needs of its key markets and market segments.

customers. Building an Inclusive and Sustainable Financial Future

NBK is committed to leveraging technology to enhance customer

experiences, drive operational efficiency, and contribute to a
more inclusive and sustainable financial ecosystem. In 2024,
NBK continued to redefine banking by digitizing existing products
and diversifying digital offerings to enhance customer experience
while improving operational efficiency. Leveraging technology,
NBK provided innovative tailored services that met the evolving
needs of its customers.

NBK Annual Report 2024

NBK continued to expand its digital offerings, introducing a range
of innovative products and services that cater to the evolving
needs of its customers, solidifying its position as a leader in
digital banking in Kuwait and potentially expanding into other
markets. The introduction of Jeel, a youth-centric banking
solution under the umbrella of Weyay, has enabled young
individuals to access essential financial solutions, empowering
35%
the next generation and fostering a more inclusive financial Total recommended cash
future. dividends to be distributed
Cultivating a Sustainable Future for All Stakeholders to shareholders in 2024

NBK recognizes that a thriving future for our organization and

our communities is inextricably linked to a sustainable future
for the planet. Guided by our commitment to “Driving Innovation
for an Inclusive and Sustainable Financial Future,” we have
We have solidified our
embarked on a transformative ESG journey. A key highlight of leadership in sustainable
2024 was the development and approval of NBK’s Group-level finance through the
ESG Policy, providing a comprehensive framework for integrating
sustainability across all aspects of our business. issuance of our inaugural
USD 500 million Green
We have also solidified our leadership in sustainable finance
through the issuance of our inaugural USD 500 million Green
Bond.
Bond. This landmark achievement, funding projects focused on
climate change mitigation such as green buildings, renewable
energy, and clean transportation, demonstrates NBK’s dedication
to a greener future and our role in fostering a more sustainable
world.

NBK set a new benchmark by becoming the first bank in Kuwait

and the sixth in the MENA region to join the Partnership for The Ordinary General Assembly Meeting on March 23rd, 2024,
Carbon Accounting Financials (PCAF). By participating in reaffirmed our commitment to excellence. A key decision was
PCAF, we will enhance our ability to measure and manage approving the Board of Directors’ recommendation to distribute
our environmental impact, aligning our operations with global 25% cash dividends to shareholders for the second half of the
best practices in sustainability reporting and environmental financial year (25 fils per share), bringing total cash dividends for
disclosures. This commitment to transparency and accountability the year to 35 fils per share. The AGM also approved the issuance
is crucial as we strive to build a more sustainable future for all of 5% bonus shares (five shares for every one hundred shares),
stakeholders. a testament to the Bank’s strong financial performance and a
gesture of appreciation to its loyal shareholders.
NBK is in the final stages of crafting an Environmental and
Social Risk Management (ESRM) Framework, integrating ESG Moreover, the Board of Directors recommended the distribution
considerations into the Bank’s risk management framework. of 25 fils per share for the second half of 2024, bringing the total
We are committed to setting new standards in sustainable cash dividend distribution for the year 2024 to 35 fils per share,
finance for the banking industry, contributing to a better in addition to 5% bonus shares. That brings the cash payout ratio
world for future generations. We aspire to be trendsetters in for the year to around 50% of the profits attributable.
fostering sustainable banking, not only in Kuwait but across all
of our markets, demonstrating leadership in every initiative we Investing in Our People’s Well-Being and Development
undertake.
NBK recognizes that our employees are our most valuable asset.
Upholding Sound Governance Principles We foster a high-performing and inclusive culture where our
people can thrive. In 2024, we also invested in their professional
NBK is deeply committed to upholding the highest ethical development through robust training programs, equipping them
standards and sound governance principles. Our dynamic with the skills to navigate the evolving financial landscape.
and proactive governance framework fosters transparency,
accountability, and ethical conduct across all levels. The Board We have prioritized employee well-being with initiatives like
of Directors, in collaboration with the dedicated executive reduced working hours on Thursdays and the introduction of
management team, prioritizes aligning strategic decisions with a Well-being Leave. We have also launched a comprehensive
the Bank’s core values to effectively serve the interests of its Diversity, Equity, and Inclusion (DE&I) Strategy in December
shareholders. 2024, fostering equal opportunities across all levels of the Bank

7
1 Strategic Review

Going Forward with a Collective Sense of Purpose

As we look towards 2025 and beyond, I am confident in

Our strategic vision our unwavering commitment to serving the interests of our
stakeholders and ensuring the long-term success of our
focuses on fostering institution. Our strategic vision focuses on fostering sustainable
sustainable growth through growth through innovation, financial inclusion, and robust
innovation, financial inclusion, risk management. We will also work on enhancing our digital
capabilities and leveraging technology and data analytics to
and robust risk management. ensure exceptional service and operational efficiency.

Aligned with Kuwait’s Vision 2035, NBK will continue financing

transformative projects and nurturing strong relationships with
regulators. We will maintain competitiveness domestically while
and promoting safe and secure working environments for all pursuing international growth, expanding our wealth management
employees. Our commitment to employee well-being has been services across the GCC and capitalizing on our strategic
recognized with the Gold Award for “Excellence in Health and advantage in offering Islamic products and services through
Wellbeing” from the prestigious Society for Human Resource Boubyan Bank.
Management (SHRM) at the SHRM MENA STAR Awards.
Our dedication to sustainability will be underscored by
Driving Prosperity in Kuwait and Beyond strong initiatives in sustainable finance and investments in
environmentally responsible projects. As we navigate future
NBK has been a cornerstone of economic prosperity in Kuwait challenges and opportunities, NBK is well-positioned to
and the the markets we operate within. By strategically financing maintain its leadership in the financial sector, deliver value to
key infrastructure projects, supporting entrepreneurship, and our shareholders, and contribute to the broader community’s
fostering financial inclusion, we contribute significantly to the prosperity.
economic growth and development of Kuwait, aligning with the
goals of Kuwait’s Vision 2035. As we move forward, our shared values and collective sense
of purpose will guide us. I look forward to another year of
Likewise, through strategic expansion and a focus on customer remarkable achievements and strategic advancements, built
needs, we are building a robust international presence that on the solid foundation of our strong partnership and your
facilitates trade, investment, and broader economic growth unwavering trust.
across our network. This commitment to fostering economic
progress reflects NBK’s dedication to creating a more prosperous
future for all stakeholders.
Acknowledgments
On behalf of the Board, I extend our deepest gratitude
to all our stakeholders for their continued support. I
acknowledge the invaluable contributions of my fellow
directors and the exemplary leadership of our executive
management team. A heartfelt thanks to our dedicated
employees, whose hard work is the backbone of our
success.

We are profoundly grateful to our esteemed customers

for their unwavering trust and confidence in NBK, and our
shareholders, whose support and investment drive our
continuous growth and innovation. Finally, we express
sincere thanks to the Central Bank of Kuwait and the
Capital Markets Authority for their guidance and support.
NBK’s achievements are a testament to the collective
efforts and unwavering dedication of all those who have
contributed to our journey.

NBK Annual Report 2024

9
1 Strategic Review

Year in Review
January June
• NBK Hosts a Media Awareness Workshop on Sustainability and • NBK Pioneers Sustainable Finance with USD500 Million Debut
Climate Change Green Bonds
• NBK Hosts a Series of Workshops for the Employees of Kuwait • NBK Launches Kuwait’s First International Mortgages Center
Fund for Arab Economic Development (KFAED) • NBK Signs Exclusive Collaboration Agreement with IE
University - Spain
• NBK Introduces “WAMD” Instant Payment Service on Its
February Mobile Banking App

• NBK Hosts First Annual Meetup for “Tableau” Data Analytics July
and Visualization Software
• NBK and Zain Sign MOU with KFAS to Launch a Digital Program • NBK Signs MoU with Kuwait Clearing Company
for the Kuwaiti Youth • NBK First Bank to Implement Super IPaaS Solution in the
• NBK Supports LOYAC Agricultural Trips to Promote Region
Sustainable Agriculture
• NBK Unveils ‘NBK Wealth’ for Premium Wealth Management August
Solution
• NBK Unveils Payment Verification Service on Its Mobile
March Banking App
• NBK Launches Enhanced Al-Shabab Package
• NBK Ranks Among the Top-Rated GCC Financial Institutions
for Climate Actions by CDP September
• NBK Increases Al-Jawhara Account Total Prizes to
KD 5 Million
• NBK Leads The Banker’s 2024 List of Top 100 Arab Banks in
Kuwait
April • NBK Honors Kuwait’s Champions in the 2024 Paralympic
Games
• NBK Celebrates the Graduation of the First Wave of “NBK Tech
Academy” October
• NBK Launches “NBK 247 Cashback Visa Platinum Prepaid
Card ” with up to 24% Cashback
• NBK Launches Tech Majors’ Workshop in Collaboration with
Kuwait University
May • NBK Participates in “Watheefti”, Kuwait’s Largest Career Fair
• NBK Signs Four Strategic Agreements Valued at $1.6 billion at
• NBK is the First Bank in Kuwait to Join the Partnership for the FII 8th Edition
Carbon Accounting Financials (PCAF)
• NBK Becomes the First Bank In Kuwait to Adopt “DHL November
GoGreen Plus” Service
• NBK Pledges KD 8 million to Boost Sharq Area with New Park
• NBK the Only Kuwaiti Bank in Global Finance’s List of the
and Parking Facility
World’s 100 Safest Banks for 2024
• NBK Announces its Strategic Partnership with the Future
• NBK Launches the “NBK Pioneers Program” for High Potential
Investment Initiative (FII) Institute in KSA
Employees in the Sales Channels
• NBK Joins COP29 Discussions to Advance Sustainable
Financing and Bridge the Climate Investment Gap

December
• NBK acquires 51% of the Capital of the leading payment
service provider, UPayments.
• NBK Introduces AFAQ-GCC’s Unified Payment System on
Mobile Banking

NBK Annual Report 2024

Institutional Strength
Credit Ratings
NBK is a robust financial institution, as demonstrated by the trust that its customers and shareholders have placed in it, as well as its
long-term credit ratings.

Rating Agency Long-term Rating Standalone Rating Outlook

A1 a3 Stable

A a- Stable

A+ a- Stable

Awards and Accolades

Global:
• Best in Innovation -Global 2024 NBK’s rating at ‘BBB’ per the MSCI audit
Regional:
• Best Online Product Offerings in the Middle East 2024
• Best in Innovation in the Middle East 2024
• Best Bank for ESG-Related Loans in the Middle East 2024
Country:
• Best Online Product Offerings in Kuwait 2024
• Best in Innovation in Kuwait 2024
• Best Bill Payment and Presentment in Kuwait 2024
• Best Mobile Banking App in Kuwait 2024 Constituent of the FTSE4Good Index Series
• Best in Lending in Kuwait 2024
• Best SME Bank in Kuwait 2024
• Best Foreign Exchange in Kuwait 2024
• Best Trade Finance in Kuwait 2024
• Best Bank in Kuwait 2024
• Best Cash Management Bank in Kuwait 2024
• Most Improved App for Digital Payments for Digital Payment Number 1 Banking Brand in Kuwait
Innovations in the New NBK Mobile Banking Application 2024

• Best Bank for Diversity and Inclusion in Kuwait 2024 (Euromoney)

• Best Bank for SME in Kuwait 2024 (Euromoney)
• Best Real Estate Bank in Kuwait (Euromoney)
• Best Retail Bank in Kuwait 2024 (MEED)
• Best Innovation Programme 2024 (MEED)
• Excellence in Sustainable Investment 2024 (MEED)
• MENA Fund Manager of the Year 2024- NBK Wealth (MEED)
“C” Score for 2024 for both the Climate Change
• Best Trade Finance Bank in Kuwait 2024 (GTR)
• Best Bank for employee health and wellbeing - Gold (SHRM) and Forests Categories

11
1 Strategic Review

Vice Chairman
& Group CEO’s
Statement

Isam J. Al-Sager
Vice Chairman &
Group Chief Executive Officer

Dear Shareholders, Investors and Partners,

It is with great pleasure that I share with you that 2024 was a
year marked by resilience, growth, and a steadfast commitment
to our long-term vision. Navigating a dynamic global landscape,
Our diversification strategy, NBK demonstrated its strength and adaptability, achieving strong
financial performance while “Driving Innovation for an Inclusive
encompassing products, and Sustainable Financial Future”.
services, and geographies,
In a dynamic and evolving landscape, characterized by global
played a crucial role in economic uncertainty, supply chain disruptions, and a complex
geopolitical environment, NBK demonstrated its adaptability and
driving our continued resilience. We successfully pursued diversification strategies
progress. and harnessed technological innovation, expanding our global
footprint and seizing emerging opportunities. Our diversification
strategy, encompassing products, services, and geographies,
played a crucial role in driving our continued progress.

A higher interest rate regime and a stable operating environment

in Kuwait further bolstered our financial performance. Our
financial success enabled the Board to reward shareholders
with a 10 fils per share semi-annual dividend in addition to
recommending the distribution of 25 fils per share for the second
half of the year; demonstrating resilience and affirming the Bank’s
strong financial performance despite a challenging operating
environment.

Delivering Financial Growth

By December 31, 2024, NBK’s total assets reached KD 40.3

billion, marking a 7.1% year-on-year growth, driven by robust
performance across our business lines. Attributable shareholders’

NBK Annual Report 2024

 NBK delivered exceptional results,
enhancing revenue streams
and benefiting from prudent
policies that ensured solid
asset quality and strong
capitalization
NBK’s core business
segments significantly
contributed to our growth
in 2024, through both our
conventional, and our
Islamic banking solutions

equity stood at KD 3.9 billion, with profits attributable growing banking application, to ensure a seamless customer experience
by 7.0% year-on-year to reach to KD 600.1 million. NBK’s Return and efficient service delivery. Our mobile banking app, with
on Average Assets (ROAA) remained strong at 1.55% in 2024, more than 65 new features, earned several prestigious awards,
up from 1.53% in 2023. The payout ratio was stable at around including recognition for the “Most Improved App for Digital
50% of net profits, resulting in total cash dividends of 35 fils per Payments”, “Best in Innovation - Global”, and “Best Mobile
share, showcasing confidence in NBK’s healthy capitalization Banking App in Kuwait”.
and commitment to maximizing shareholders’ value. Customer
deposits grew to KD 22.9 billion, a 4.2% increase over 2023, while Ensuring a Solid Operational Performance
our net loan portfolio expanded by 6.4% to KD 23.7 billion.
NBK’s journey this year was marked by a strong operational
By the end of 2024, our Non-Performing Loans (NPL) to gross performance across the group, underscoring its continued
loans ratio was 1.34%, with an NPL coverage ratio of 263%, business growth. NBK’s core business segments significantly
reflecting NBK’s effective risk management. Leveraging contributed to our growth in 2024, through both our conventional,
geographical diversification, digital advancements, and a strong and our Islamic banking solutions - which are provided by our
financial position, NBK delivered exceptional results, enhancing Islamic banking arm, Boubyan Bank.
revenue streams and benefiting from prudent policies that
ensured solid asset quality and strong capitalization. As of NBK Wealth strengthened its wealth management offerings,
December 31, 2024, NBK’s market capitalization stood at KD 7.5 increasing Assets Under Management (AUMs), and fostering
billion. deeper client relationships through initiatives like NBK Wealth
House View and NBK Wealth Insights. It diversified its investment
Innovating for Sustainable Value Creation portfolio across asset classes, expanded its product offerings,
and successfully attracted new clients, further solidifying its
NBK is committed to delivering exceptional value to its clients position as a leading wealth management provider.
by introducing innovative products and services tailored to their
diverse needs across all of our business segments. In 2024, we Corporate Banking maintained its leadership through continued
established strategic partnerships with leading institutions, such support to client growth by providing customized solutions,
as JP Morgan Asset Management and Intervest, expanding our including financial advisory services, to manage cash flow and
investment solutions. meet evolving needs across local and international markets. It
diversified its client base by focusing on high-growth companies
We have also prioritized enhancing the customer experience and strengthening credit risk management to ensure portfolio
through technological innovation, including the introduction of health and high asset quality.
several fully digital prepaid cards and the improvement of our

13
1 Strategic Review

Consumer Banking expanded its customer base by targeting new Fostering the Well-Being of Our People
segments, including First Jobbers, while introducing innovative
products such as digital prepaid cards, a fixed saving plan, and NBK is a firm believer in a holistic approach to employee well-
the JEEL account for young clients through our digital bank Weyay. being, not only ensuring the mental, physical, and financial
It also fostered stronger customer relationships through initiatives wellbeing of its employees, but also fostering a thriving,
like the Retention Hub, providing personalized support. motivated, and loyal workforce. We are deeply committed to
workforce diversity, equity, and inclusion, fostering a workplace
NBK’s International Banking Group maintained a high-quality that ensures fair treatment for all. In December 2024, we
portfolio while expanding its geographic reach, including the launched our comprehensive Diversity, Equity, and Inclusion
establishment of a Centralized Syndications Desk in the UAE. (DE&I) strategy, dedicated to fostering an inclusive environment,
It also diversified its operations across international markets, driving innovation, and better serving our communities and
launching new consumer banking propositions in Egypt and stakeholders. This strategy addresses systemic barriers, ensures
Bahrain while exploring new market opportunities. equal opportunities for all, and aligns with the United Nations
Sustainable Development Goals (UN SDGs).

We have prioritized attracting and developing top talent,

through rigorous selection, in alignment with our values,
transparent evaluations, and a merit-based culture. We have also
NBK’s International implemented a robust suite of mentoring and training programs
Banking Group in 2024 to equip our workforce with the necessary skills for a
rapidly evolving industry. Our training initiatives have garnered
maintained a high- multiple prestigious awards, including the 2024 MERIT’s Special
Recognition for Developing Women Leaders for our NBK Rise
quality portfolio Program, highlighting their significant impact. Our workforce is
while expanding its vital to our success, fueled by unwavering dedication and loyalty
that drive us towards our shared goals.
geographic reach.
Building a Sustainable Future

Guided by our commitment to building a sustainable future for

all stakeholders, the Board approved the Group’s ESG Policy in
2024, underscoring our dedication to environmental, social, and
governance principles. We have also launched our debut USD 500
Group Treasury successfully managed liquidity by optimizing million Green Bond, demonstrating our steadfast commitment to
funding sources, shortening deposit durations, and diversifying a sustainable financial future.
the Group’s funding base. These Treasury initiatives contributed to
lower funding costs while maintaining a robust liquidity position, We have set a new benchmark by becoming the first bank in
despite regional geopolitical events. Kuwait and the sixth in the MENA region to join the Partnership
for Carbon Accounting Financials (PCAF), enhancing our
Prioritizing Robust Risk Management decision-making, and enabling monitoring the Bank’s progress in
implementing its ESG Strategy and its progress towards its 2060
In 2024, we prioritized a robust and prudent approach to risk carbon neutrality commitment.
management, emphasizing a strong risk culture across the Group.
This approach, underpinned by a robust governance framework Our commitment to positive societal impact was also evident
and strong leadership from the Board and the Board Risk and through our robust CSR initiatives. In 2024, NBK’s community
Compliance Committee (BRCC), ensured comprehensive risk investments reached around KD 30 million (USD 97 million),
monitoring and effective controls. marking a 9% increase from 2023. These efforts highlights our
dedication to driving meaningful change and supporting the
By fostering a culture of accountability and adherence to the communities we serve.
highest regulatory standards, we maintained a strong risk profile
and positioned the Bank for sustainable growth while upholding
our commitment to stakeholder expectations and operational
excellence.

NBK Annual Report 2024

NBK will continue to play a pivotal
role in the Kuwaiti economy,
leveraging financing opportunities
emerging from the National
Development Plan and its pipeline
of mega-projects

Moving Ahead with a Steadfast Commitment to Excellence As we set our sights on the more distant future, I am filled
with confidence that our dedicated team, strategic vision,
NBK will continue to play a pivotal role in the Kuwaiti economy, and steadfast commitment to excellence will elevate NBK to
leveraging financing opportunities emerging from the National new heights. We will continue to deliver sustained value to our
Development Plan and its pipeline of mega-projects. We are stakeholders and strengthen our position as a leader in the
committed to expanding our leadership beyond the Kuwaiti financial sector.
market through strategic growth in key international markets. We
will continue to prioritize innovation and leverage technology to Acknowledgements
preserve our leadership and foster sustainability, in alignment
with our commitment to “Driving Innovation for an Inclusive and On behalf of the executive team, I extend our heartfelt gratitude
Sustainable Financial Future”. to all stakeholders for their invaluable contributions to the bank’s
success. Your support and collaboration have been instrumental
While navigating the evolving geopolitical landscape, we remain in our achievements. Looking ahead, we reaffirm our unwavering
optimistic about capitalizing on emerging opportunities. The commitment to safeguarding your interests and nurturing our
Group will fortify its future by balancing robust risk management collective ambitions.
with a forward-looking approach to sustainable growth and
innovation. NBK is charting a path toward a sustainable future as NBK pledges to remain your trusted partner, continually
it continues to innovate and adapt to the evolving landscape of prioritizing innovation, sustainability and excellence in all our
sustainable finance, playing a pivotal role in shaping the future of endeavors. Together, we will chart a course toward a future of
the region. sustained value creation, ensuring that our legacy of trust endures
for generations to come.
In 2025, we will prioritize business diversification through digital
disruption, building our digital business using modern technology
and agile models, and expanding the customer base of Weyay
with innovative digital products. We will focus on growth in key
markets and continue advancing on our digital and
sustainability agendas.

We will continue to deliver

sustained value to our
stakeholders and strengthen our
position as a leader in the financial
sector.

15
1 Strategic Review

Market Outlook
Global Growth Steady in 2024, But Trump’s (IMF) to be only slightly higher than in 2023-24 at
Re-Election Injects Policy Uncertainty 3.3%, the world economy is at a crossroads, given
the re-election of Donald Trump as US president
The year 2024 was pivotal, with key central banks in November 2024. That election has shifted the
across the world embarking on much-awaited US interest rate outlook and already led to an
monetary policy easing driven by falling inflation increase in policy uncertainty across the globe. In
and in combination with a faltering economic all cases, the US economy looks set to continue
landscape in some regions, especially Europe. outperforming most G7 peers, while the likelihood
3.2% Economic growth among major developed
economies remained uneven, with the US
of sizable fiscal policy support in China has
increased given the higher uncertainty surrounding
Global GDP
continuing to outperform, recording above- the outlook. Overall, a cautious outlook for
growth estimated
trend growth and defying slowdown predictions, the global economy in 2025 is warranted, with
for 2024 (IMF) supported by a robust but easing job market and prospects dependent on policy moves, both
solid consumer spending. Conversely, Europe, economic and geopolitical, by the new US
including the UK, recorded lackluster growth amid administration.
USD 80 a less vibrant corporate sector, a less resilient
Average Oil Price in consumer sector, shaky external demand, and Oil Prices Broadly Softer Amid Demand Worries,
2024 (ICE Brent/bbl) domestic political headwinds in key economies. Emerging Supply Overhang
Meanwhile, the post-Covid rebound in China
continued to be uninspiring, with the authorities Oil prices started 2024 brightly on another round
seeking to support the ailing property sector of OPEC+ voluntary cuts, elevated geopolitical
and boost domestic demand through a series of risk and expectations of aggressive central bank
stimulus measures that have so far proved to be interest rate cuts supporting economic growth;
insufficient. but prices ended the year under pressure amid
worries over a flatlining Chinese economy and
Looking ahead, while global GDP growth for 2025 a developing supply overhang. With prices
is forecast by the International Monetary Fund plummeting in the third quarter by 17%, key

World Real GDP (% y/y) International Oil Price (ICE Brent USD/bbl)

8 8 100 100

6 6 95 95

90 90
4 4
85 85
2 2
80 80
0 0
75 75
-2 IMF est. -2
World /f'casts 70 70

-4 Advanced economies -4 65 65
Emerging markets
-6 -6 60 60
2010 2014 2018 2022 2026 Jan - 23 May - 23 Sep- 23 Jan - 24 May - 24 Sep- 24 Dec- 24

Source: IMF World Economic Outlook Update (January 2025) Source: Haver

NBK Annual Report 2024

OPEC+ members repeatedly delayed the unwinding of their 2.2 Vision 2040 reform efforts, which have led to a decline in public
mb/d of voluntary production cuts. In December, after another debt and a first investment grade sovereign rating in seven
supply cut rollover, OPEC+ announced an extended, 18-month years. Notwithstanding the risk of a weaker global operating
supply cut taper starting April 2025. By 2024’s close, Brent had environment, the outlook for the GCC in 2025 is broadly positive,
dropped 3.1% y/y to $74.6/bbl, posting a second consecutive underpinned by continued strong government investment and
year of declines and an annual average of $80.0/bbl. Market expectations of further monetary loosening.
fundamentals point to further price softness in 2025. However,
there are considerable uncertainties related to OPEC+ supply Kuwait’s Gdp Could Rebound in 2025 After Subpar 2024 Led by
management, US president Trump’s energy policies, including his Oil Sector Cuts
potential tightening of sanctions on Iranian oil flows, and Chinese
economic growth. Economic activity in Kuwait was subpar in 2024, with non-oil
output expanding by a below trend rate amid subdued consumer
Strong Non-Oil Growth in Saudi and the UAE Helped the GCC spending growth, relatively high interest rates, contractionary
Withstand External Headwinds fiscal policy, and oil output lower due to OPEC+ mandated
production cuts. Crude production averaged 2.41 mb/d in 2024,
The GCC economy fared well in 2024, despite international down almost 7% on 2023’s level, but in line with the country’s
headwinds including elevated interest rates, geopolitical OPEC+ quota. 2025 should see some volumes return as OPEC+
tensions, falling oil prices, and oil output constrained by OPEC+ starts unwinding members’ voluntary cuts. Meanwhile, official
policy. Aggregate GDP growth is estimated at 1.4%, up from provisional data showed non-oil GDP growth at 1.0% y/y in Q1-Q3
0.4% in 2023, but more impressive is the ongoing expansion 2024, and overall growth at -3.2% thanks to declining oil output.
in non-oil activity, led by Saudi Arabia and the UAE. Through a
combination of business-friendly structural reforms, increased Monthly gauges of economic activity revealed a mixed picture
trade and tourism flows and high domestic investment rates, in 2024, with consumer spending growth easing to low single
robust non-oil growth of 3.5-4.5% is estimated in both countries. digit rates (+4%) on the one hand and credit, real estate and
Fiscal balances, however, deteriorated across the region due projects activity strengthening on the other. By December’s close,
to lower oil receipts. Among the smaller GCC economies, domestic credit growth had risen to 3.7% y/y, more than double
Oman earned plaudits for its prudent fiscal management and 2023’s rate, on gains in both business and household credit

GCC Real GDP (% y/y) Kuwait Crude Oil Production (mb/d)

6 6 2.9 2.9

5 5
2.8 2.8
2024 2025
4 4
2.7 2.7
3 3

2 2 2.6 2.6

1 1 2.5 2.5

0 0
2.4 2.4
-1 -1
2.3 2.3
-2 -2

-3 -3 2.2 2.2
Bhn Kwt Oma Qtr KSA UAE GCC Jun - 22 Dec- 22 Jun - 23 Dec- 23 Jun - 24 Dec - 24

Source: NBK estimates/forecasts Source: Haver

17
1 Strategic Review

that were also supported by the commencement of the interest previously. Capex is budgeted slightly lower, but we expect
rate-cutting cycle. Real estate sales, meanwhile, were up 23% actual investment to trend up from recent weak levels to meet
for the year as a whole amid improving market sentiment and development plan objectives.
lower residential sector valuations. For the projects market, 2024
was its best year since 2017, up 45% on 2023 with KD2.7 billion In the banking sector, Kuwaiti banks continued to post solid
worth of awards; mainly housing, water and power sector awards. results in 2024. Most recorded positive growth in net profits and
These improving metrics provide a reasonable foundation for profitability metrics (return on equity, return on assets) over the
slightly stronger non-oil activity in 2025. first nine months of the year, a continuation of the trend seen
since 2021. Asset quality remained generally good, with the cost
Consumer price inflation, meanwhile, trended lower in 2024, as of risk under control and mostly lower than historical levels.
cost pressures, especially in the food and clothing categories, Capital adequacy continued to be solid, standing at 18.2% as of
eased amid unwinding supply chain bottlenecks and softer September 2024, well above the minimum requirement of 13%.
consumer demand. Inflation averaged 2.9% in 2024, slowing
from 3.6% in 2023 and could ease further in 2025. Egypt Undergoes Major Economic Reforms and Attracts Large
Investment Flows
Monetary policy loosened in 2024, as the Central Bank of
Kuwait in September followed the US Federal Reserve in cutting It was an important year for the Egyptian economy, with the
benchmark interest rates. By 2024’s close, the key discount rate authorities embarking on an ambitious, transformative macro-
had been reduced by 25 bps to 4.0% compared to 100 bps of fiscal agenda amid significant local and external challenges, not
cumulative cuts by the Fed, with the authorities continuing on a least rapid inflation, energy rationing and a conflict in Gaza that
more gradualist rate setting path. was carrying with it human, geopolitical and economic costs. In
February 2024, the state inked a landmark deal worth USD 35
The government of HRH Sheikh Ahmad Al-Abdullah Al-Sabah, billion with the UAE to develop the Ras El-Hekma region. This
the Prime Minister, which was appointed in May in the wake of and the authorities’ bold decision to devalue the currency and
HRH the Emir’s decision to suspend parliament for up to four introduce a more flexible exchange rate unlocked billions more
years, adopted a moderately contractionary budget for the year, in financing from international organizations including the IMF.
as it looked to restrain spending and control a fiscal deficit that The government followed up with cuts to energy subsidies and
was expected to widen to 4.5% of GDP amid lower oil revenues. the privatization of some state assets. By 2024’s close, fiscal and
Further deficits are expected in the medium term, with the IMF external buffers had strengthened, the currency had stabilized,
urging the government to adopt a medium-term plan of gradual and inflation was trending down. In Q3, Egypt’s GDP expanded
fiscal consolidation and broader structural reforms. The new at its fastest rate since Q1 2023, at 3.5% y/y. Capping the major
government’s multi-year economic plan due in early 2025, should turnaround was a first sovereign credit rating upgrade by Fitch
contain measures in that regard. The draft budget for fiscal year since 2019 (to ‘B’ from ‘B-’).
2025-26 points to modest spending rationalization alongside
a solid rise in non-oil revenues (through higher administrative
fees and the new 15% corporate tax on multinationals), with
the latter’s share of overall revenues rising to 16% from 14%

US Interest Rates (%) Egyptian Pound Exchange Rate (EGP/USD)

6 6 10 10

Fed policy rate 15 15

5 5
US 10-yr T bond 20 20

4 4 25 25

30 30
3 3 EGP weaker
35 35

2 2 40 40

45 45
1 1
50 50

0 0 55 55
2018 2019 2020 2021 2022 2023 2024 2025 2020 2021 2022 2023 2024

Source: Haver Source: LSEG

NBK Annual Report 2024

19
1 Strategic Review

Our Business Model

We use our key strength...

Stable and Dynamic Appetite Digital Leadership, Commitment Committed and

Growing Base for Challenge, fueling our to Disciplined Value-Driven
Franchise, driving our growth. innovation. Compliance, Workforce,
catering to ensuring proactive forming the
customers across risk management. backbone of our
4 continents. business.

Leveraging Creating

Our Strengths Value

to Deliver
Sustainable Value
For our stakeholders...
Our Client Base: Our People: Our Shareholders: Our Regulators
Delivering innovative financial Fostering a culture of Delivering consistent returns and Governments:
products and services, innovation and transforming and ensuring long-term value Upholding responsible
and personalized banking our workforce into highly creation through sustained practices with a
solutions. valued assets. growth strategies. commitment to robust
governance practices
and full compliance with
regulatory requirements.

NBK Annual Report 2024

 At the heart of NBK’s strategic vision lies a business
model that thrives on trust and the creation of
exceptional and sustainable value for all our
stakeholders. We are harnessing the unique synergy
of a leading digitally innovative customer base
franchise, a skilled value-driven workforce, a proactive
sustainability focus, and a disciplined compliance and
dynamic risk management approach, to redefine the
Proactive
Sustainability Focus, future of banking. As we forge ahead, we are committed
securing a better to setting new benchmarks and creating sustainable
future.
value for all of our stakeholders, building a legacy of
financial excellence.

Redefining the banking Establishing a strong global Shaping the future of Building a leading wealth
experience for all our footprint, cultivating a global capital and trade management franchise,
clients, retail, corporate, regional and international flows, bridging capital and providing tailored financial
and high-net-worth clientele within the trade flows between the solutions to a diverse
individuals, through a dynamic agile MENA region and the rest global clientele.
strategic commitment to banking industry. of the world.
digital transformation.

Our Communities:
Enabling positive change
within our communities
through initiatives that
support social and sustainable
economic development.

21
1 Strategic Review

Strategy

Digital Transformation

Corporate Banking

Defend
and Grow
Consumer Banking
Leadership
Position in
Kuwait
Build Regional
Powerhouse in
Wealth Management
Geographical,
Product
and Service Expand Regional
Presence
Diversification

Expand Islamic
Franchise

NBK Annual Report 2024

 ESG Transition

 he Bank aims to (i) remain the primary banker for the leading local companies whilst continuing to be active in
T
the mid-market sector;(ii) remain the bank of choice for foreign companies and continuing to serve at least 75% of
those companies and (iii) maintain its current market share in trade finance (over 30%).

To achieve the above, NBK will expand its coverage and broaden the range of products and services offered.

 BK intends to maintain its focus on the profitable affluent and mass affluent segments while continuing to build
N
a future-safe franchise by investing in youth segments (such as first jobbers and Shabab).

 hrough the above, the Bank aims to maintain its leadership position, maintain its focus on delivery of superior
T
customer service experience and achieve the lowest cost of funds among Kuwaiti banks.

 BK aims to continue to provide a unique proposition to high net worth clients by bringing its frontline and asset
N
management arm together as one team and complementing its superior customer service with an increasingly
wider range of investment products.

 everaging its strong trustworthy brand and geographic reach, the Bank aims to bridge capital flows between
L
Kuwait and the rest of the world.

 BK aims to replicate its success in wealth management in Kuwait in other GCC markets and build a pan-regional
N
franchise with regional origination and international asset allocation capabilities.

 he Bank’s geographic diversification strategy is to leverage its fundamental strengths and capabilities, including
T
its international reach and strong regional relationships, to build a regional platform and support growth in key
markets.

 BK focuses on markets with long-term potential through a combination of high growth economies, sound
N
demographic trends and opportunities aligned with the Bank’s competitive advantages.

 he Bank’s strategy, in relation to its Islamic subsidiary, is to differentiate it from other domestic Islamic banks
T
through a clear focus on high net worth and affluent clients and large and mid-market corporate customers.

23
1 Strategic Review

Redefining Banking Experiences

Through Digital Innovation
NBK continues to redefine banking by digitizing existing products disruption, NBK provides tailored services that meet the evolving
and diversifying digital offerings to enhance customer experience needs of its customers, solidifying its position as a leader in
and efficiency. Leveraging modern technology and digital digital banking.

• Best Mobile Banking App - Kuwait • Best Online Product Offerings -Kuwait • Market Leader in Digital Payment
& Middle East Acceptance

2024 Highlights Cutting-Edge Digital Prepaid Solutions

NBK is making significant strides in digital banking with the launch
65+ New Features for a Seamless Mobile Banking Experience of several fully-digital prepaid cards. The 247 Cashback Visa
Since the end of 2023, NBK has continuously enhanced the NBK Platinum Prepaid Card, introduced in late 2023, offers up to 24%
Mobile Banking App, adding and improving over 90 features to cashback on daily purchases; and the ability to easily redeem
provide a more efficient and seamless digital banking experience. points through the NBK Mobile App. The NBK Internet Visa Prepaid
These updates reflect NBK’s commitment to leveraging cutting- Card, released in early 2024, provides a secure online shopping
edge technology and customer-centric solutions to meet the experience. Additionally, the SELECT Digital Prepaid Card, launched
evolving needs of its users. The NBK Mobile Banking App updates through Weyay in mid-2024, offers exclusive benefits for allowance
in 2024 included; students, including cashback and instant discounts.
• Improved User Experience: Adding features to improve
users’ experience, enabling them to access transfer receipts These innovative products align with NBK’s commitment to
immediately after completing local or international transfers, providing cutting-edge digital solutions, reinforcing its dedication
to view and customize monthly statements directly from the to innovation and enhancement of customer experience. Most
app, and to access key transaction features from the main importantly, these end-to-end digital products allow customers
page, such as quick payment, bill splitting, loading accounts, to effortlessly conduct their daily banking activities. By offering
and quick send. these fully digital cards, NBK ensures that customers enjoy a
• Enhanced 3D Secure Payment Service: Providing an extra layer more convenient and rewarding banking experience, highlighting
of protection against fraud when using Bank cards for online the Bank’s role in pioneering digital banking solutions in Kuwait.
transactions and authenticating purchases through the NBK
Mobile App. On the Path to NBK’s Digital Future
• Access to WAMD Services: Enabling seamless, easy, and Looking ahead, NBK is focused on enhancing customer
convenient money transfers using only the recipient’s mobile experience through cutting-edge technology and data-driven
number, in collaboration with the automated banking company strategies. NBK’s future plans include revamping user journeys in
“Knet” and under the supervision of the Central Bank of mobile and online banking, enhancing call center technology, and
Kuwait. expanding social media engagement. NBK is also exploring
• New Digital Products: Providing Innovative products, such as Al AI solutions to add value for both customers and the Bank,
Jawhara Saver Account, with the ability to obtain a credit card ensuring continuous innovation and adapting to the evolving
linked to Al Jawahra account allowing customers to benefit digital landscape.
from exclusive offers, and to win valuable prizes.
• Relationship Manager Access: Enabling customers to view Internally, NBK will continue to leverage Agile Methodologies to
their relationship manager’s name and contact details, and to deliver world-class products and services. NBK has expanded
schedule appointments directly through the app. its cross-functional teams to augment development efforts,
• Access to NBK FlexiPay: Enabling customers to pay for ultimately resulting in impeccable digital solutions that customers
purchases in installments of up to 12 months through the NBK truly deserve.
Mobile Banking App.
• Streamlined eKYC Form: Minimizing data required from Moreover, NBK’s commitment to providing top-tier banking
customers, enhancing convenience and speed of the service, solutions is demonstrated by its focus on collecting and utilizing
as well as simplifying the Civil ID renewal process through customer feedback to make informed decisions. By leveraging
seamless integration with the Public Authority for Civil tools like CleverTap, NBK will continue to gather extensive
Information. data to support improving customer experience, engagement,

NBK Annual Report 2024

satisfaction, and retention. This user-centric approach will Weyay’s innovative products and services, introduced in 2024,
ensure staying ahead of market trends and meeting our include:
customers’ evolving needs, especially with respect to digital-
only propositions. Thus, NBK will maintain its digital leadership • SELECT Digital Prepaid Card: Tailored specifically for students,
through embracing innovative and efficient technological offering exclusive membership benefits, cashback offers, and
solutions. immediate discounts with top brands and popular delivery
apps in Kuwait.
• Jeel Card: Designed for young individuals aged 8 to 14,
Weyay Driving Digital Banking incorporating innovative features such as “Quick Pay Request”
and “Request Payment via Link” services, fostering digital
Innovation financial independence for young customers.
• Multi-Currency Prepaid Card: Provides customers with a
Since its successful launch in 2021, Weyay Bank has experienced seamless experience for both travel purchases and online
significant growth, surpassing initial expectations by four times. transactions in multiple currencies, offering competitive
This surge in demand underscores the growing appetite for exchange rates, and maximum transparency regarding fees and
digital banking solutions. In 2024, Weyay continued to innovate, transaction details.
introducing a range of products and services that cater to the • Saving Pot “Pro”: Promotes a culture of savings among all
evolving needs of its customers, solidifying its position as a societal segments, particularly the youth, offering an attractive
leader in digital banking. annual interest and helping customers boost their savings with
a simple, user-friendly platform.

Weyay 2024 Awards

• Best Digital Bank in Kuwait • Best Digital Bank in Information Security • Highest Growth in Prepaid and Debit in
and Fraud Management in Kuwait Kuwait
• Most Innovative App for Young People

Weyay Jeel: Empowering Tomorrow’s Customers Today

Jeel was born out of a deep understanding of the evolving needs of young people in today’s digital age. Recognizing the gap in the
market for a youth-centric banking solution, Weyay embarked on a journey to create a digital product that would not only meet the
financial needs of young individuals, aged 8-14, but also empower them to make informed financial decisions.

From Vision to Reality

Developing Jeel involved a rigorous process of research, design, and testing. Through in-depth research and user testing, Weyay
identified the specific needs and preferences of young people. A user-friendly interface was designed, prioritizing simplicity and
security. Rigorous testing ensured the product’s reliability and performance. This iterative approach led to the successful launch of
Jeel in February 2024.

Unveiling the Power of Jeel

With an impressive user satisfaction rate of 95%, Jeel provides a comprehensive suite of features designed to cater to the unique
needs of its young users. It offers an engaging and personalized banking experience through a user-friendly platform, with vibrant
graphics and interactive navigation, allowing users to manage their finances independently. The platform promotes financial
literacy by enabling youth to manage their spending. Security is enhanced with real-time notifications to parents via the Weyay app.
Additionally, Jeel motivates young users to adopt healthy financial habits.

Driving Impact and Shaping the Future

By offering a fun and engaging banking experience, Jeel is not only attracting a new generation of customers but also fostering financial
literacy among young people, in alignment with NBK’s commitment to social responsibility, financial inclusion, and its vision of
empowering individuals. As Jeel continues to evolve, it has the potential to revolutionize the way young people interact with finance.

25
1 Strategic Review

Operational Review
Driving Growth Through Operational Excellence
NBK has solidified its position as a leading financial institution
in 2024 through unwavering adherence to regulatory frameworks
Corporate Banking Group Awards
and responsible business practices as well as a relentless
pursuit of innovation, customer-centricity, and operational • Best Trade Finance Bank in Kuwait (Global Finance)
excellence. This section delves into the key achievements and
strategic initiatives of NBK’s various divisions as well as their
future priorities, enabling NBK to shape the future of banking.
By optimizing operational efficiency and leveraging technology,
Consumer Banking Group
NBK is well-positioned to drive sustainable growth and deliver
In 2024, NBK Consumer Banking Group advanced significantly
exceptional value to its stakeholders.
in offering digital products and services tailored to client needs.
By expanding cross-functional teams and improving process
efficiency in strategy and governance, NBK Consumer Banking
Corporate Banking Group enhanced its ability to respond to client needs more effectively.

NBK’s Corporate Banking Group successfully navigated a

Key Initiatives in 2024
complex operating environment in 2024, marked by economic
Expanding the Customer Base
uncertainties and political tensions. The division demonstrated
Consumer Banking expanded its customer base by targeting new
resilience and innovation, effectively executing its strategic
segments, including First Jobbers, through the newly launched
priorities.
Plus segment. It also extended its reach to the younger generation
with the JEEL account under the umbrella of Weyay; a financial
Key Initiatives in 2024 solution for children aged 8 to 14, addressing parental concerns
Customizing Solutions
about security, spending, and control. To foster stronger customer
Corporate Banking continued to support corporate clients’
relationships, the Retention Hub was established, proactively
growth and financial stability by providing customized solutions
engaging with customers to understand their needs, address
to manage cash flow locally and internationally through NBK’s
concerns, and provide personalized support.
network. It strengthened client relationships through the provision
of tailored financial solutions to meet their evolving needs,
Offering Innovative Products
including financial advisory services.
To meet the evolving needs of its customers, Consumer Banking
introduced a range of innovative products. Several fully digital
Diversifying the Client Base
prepaid cards were launched, such as the NBK Internet Visa
Corporate Banking continued to diversify its portfolio with a
Prepaid Card, the first fully digital prepaid card in Kuwait, and
focus on attracting and onboarding new clients with high growth
the SELECT Digital Prepaid Card offered through Weyay. It also
potential, offering a wide range of services to meet evolving
partnered with major airlines like Qatar Airways and British
needs. It supported mid-sized corporate businesses through
Airways to offer co-branded cards. Additionally, a fixed saving
a dedicated team, monitoring their growth and performance.
plan, with a recurring deposits account, was also introduced to
Additionally, it prioritized credit risk management and asset
cater to long-term saving goals.
quality, leveraging customer and market insights to ensure
portfolio health and maintain high asset quality.
Driving Digital Innovation
Consumer Banking embraced digital innovation to provide a
Driving Digital Innovation
seamless and efficient banking experience, ensuring customer
Corporate Banking implemented internal technological
satisfaction. The new NBK Mobile Banking App featured over 65
enhancements, and continued to upgrade the Corporate Banking
new features to provide a more efficient and seamless digital
online platform, improving efficiency and customer experience. It
banking experience. Weyay customer experience was also
also invested in developing the workforce, equipping employees
enhanced by implementing intuitive digital interfaces, streamlining
with the skills and knowledge to navigate the changing landscape.
onboarding and introducing tailored financial management tools
appealing to the youth. Security was also enhanced for online
Priorities for 2025 purchases by introducing biometric authentication, eliminating the
With mega-government projects expected to resume, the
need for OTPs and reducing the risk of fraud.
corporate banking landscape is poised to improve. The Corporate
Banking Group will continue to focus on identifying and capturing
growth opportunities, while enhancing its service offerings and
operational efficiency through strategic initiatives. The division
will adopt a proactive, customer-centric approach, with a focus on
improving the customer journey for the WOLC services (Corporate
Online Banking).

NBK Annual Report 2024

Priorities for 2025 Driving Digital Innovation
In 2025, Consumer Banking will aim to foster a forward-thinking NBK Wealth embraced digital innovation to enhance client
culture, shifting from traditional sales to a customer advisory role. experience and operational efficiency. It launched the NBK
The Group will focus on self-service channels and target various Wealth App and enhanced the e-banking platform in Switzerland.
client segments with new digital products, including affluent NBK Wealth streamlined processes and achieved significant
clients, youth, first jobbers, and retirees. By improving digital productivity gains by introducing new technological innovations
offerings including having a smoother and highly secure mobile and enhancing existing capabilities.
banking experience, Consumer Banking aims to reduce costs,
shorten branch queues, and boost customer satisfaction. Priorities for 2025
NBK Wealth plans to address evolving client preferences by
offering holistic wealth management solutions, focusing on digital
delivery for payments, trading, and reporting. NBK Wealth aims to
Consumer Banking Group Awards broaden its advisory and investment offerings, expand its regional
presence, and enhance its collaboration initiatives. By embracing
• Best Retail Bank in Kuwait (Meed) innovation and continuously investing in human capital, NBK
• Best Digital Bank in Kuwait - Weyay (Meed) Wealth will meet the growing demand for alternative investments
and ensure an exceptional client experience.
• Best Mobile Banking App - Kuwait (Global Finance)

NBK Wealth Awards

NBK Wealth
• Best Private Bank in Kuwait 2025 (Global Finance)
NBK Wealth Management committed to deliver exceptional client
• Best Private Bank for Sustainable Investing in the Middle
experiences and innovative solutions in 2024. By adopting a
holistic approach, leveraging technology, NBK Wealth empowered East 2025 (Global Finance)
clients to achieve their financial goals. • MENA Fund Manager of the Year award (MEED Magazine)

Key Initiatives in 2024

Enhancing Services
NBK Wealth continued to strengthen its wealth management Group Treasury
and investment services. It increased the number of invested
accounts and new-to-bank accounts, fostering deeper client NBK’s Group Treasury played a crucial role in navigating the
relationships through initiatives like NBK Wealth House View and dynamic interest rate environment in 2024 and maintaining
NBK Wealth Insights. It effectively managed portfolios, mitigating a solid liquidity position. By effectively managing liquidity,
risks and generating attractive returns across multiple booking mitigating interest rate risk, and optimizing funding costs, Group
centers. It also introduced a Discretionary Portfolio Management Treasury contributed to the Bank’s overall financial performance.
(DPM) solution focused on the Leasing and Finance Program Additionally, Group Treasury continued structuring creative
(LFP), optimizing capital deployment. hedging solutions and investment products, meeting its different
clients’ needs.
Diversifying and Expanding
NBK Wealth broadened its offering and diversified client exposure Key Initiatives in 2024
across asset classes and capital structures by expanding its Leading Strategic Initiatives
active Global Equities and Fixed Income offerings. It launched The Group Treasury led efforts to revamp the Return on Capital
NBK’s largest-ever leasing fund and its largest-ever RE fund. It also and Risk-Adjusted Return on Capital computations to improve the
successfully launched new funds for HNW and institutional clients assessment of new transactions. It also led the implementation
in Kuwait and KSA, including three liquid funds, and launched of a new Funds Transfer Pricing (FTP) Policy to enhance the
private banking activities in KSA in collaboration with NBK’s management of the balance sheet and the pricing of interest rate
International Banking Group. Additionally, NBK Wealth partnered and liquidity risks. Moreover, it successfully issued the Bank’s USD
with JP Morgan Asset Management to offer selective investment 500 million debut Green Bond, demonstrating a commitment to
products. sustainable finance.

27
1 Strategic Review

Optimizing Funding Sources International Banking Group

The Group Treasury effectively managed liquidity by optimizing In 2024, the International Banking Group (IBG) successfully
the funding duration and diversifying funding sources, which navigated a challenging operating environment characterized
contributed to lowering funding costs while maintaining a robust by global economic uncertainties and currency fluctuations. By
liquidity position. It maintained sufficient holdings of high-quality leveraging its strong franchise, experienced team, and innovative
liquid assets (HQLA), including local treasuries, sovereign debt approach, IBG achieved significant milestones and reinforced its
of operating markets, and high-grade international bonds, all position as a leading international banking group.
within regulatory requirements and internal risk appetite. Despite
regional geopolitical events, the Bank demonstrated resilience in Key Initiatives in 2024
securing funding at competitive costs. Elevating Services
NBK’s IBG maintained a high-quality portfolio across all locations,
Driving Digital Innovation contributing significantly to the Group’s sustainable assets. It also
After successfully implementing the Murex booking system few established a Syndications Desk in the UAE to support corporate
years ago, the Group Treasury continued looking into ways to and CRE transactions across NBK’s network. Additionally, IBG
enhance operational efficiency and cater to new products while expanded its Non-Resident Mortgage Proposition to several
carrying on with its efforts to roll out the Murex system into European countries.
other NBK branches and subsidiaries. Furthermore, it enhanced
NBK FXT Platform, onboarded new clients, and continued Diversifying and Expanding
improving client experience and product offerings. Additionally, IBG focused on diversification efforts across international
it continued improving the Rate Publisher platform, a system markets, leveraging the Singapore branch as a hub for Asia and
used to streamline the publishing of foreign exchange rates and the subsidiary in France to cover European Union countries. IBG
interest rates across the different channels. also launched new consumer banking propositions in Egypt and
Bahrain, namely “Beyond” for upper-affluent customers in Egypt
Priorities for 2025 and “Privilege Banking” for affluent clients in Bahrain.
The Group Treasury’s main goal is to support the Bank’s growth
plans in an efficient and cost-effective way, amid volatile Driving Digital Innovation
interest rate and liquidity environments. The Group Treasury will IBG is investing in digitization and automation, empowering
continue with its efforts to leverage new technologies into its customers through self-service capabilities and reducing turnaround
operating model to further enhance client experience, improve times. Additionally, in collaboration with Group Operations and IT,
operating efficiencies, and reduce risks. Special attention will IBG is revamping digital channels across all locations, with the first
be paid to the debt capital markets, in line with the Bank’s launch in France and plans to roll out enhanced digital channels to
expected funding and capital ratios needs. Efforts to broaden several locations in the next few years.
product offerings and services for clients in Kuwait and overseas
will continue, including the expansion of the Bank’s hedging Priorities for 2025
solutions and investment product offerings. The Group Treasury IBG is well-positioned to capitalize on future growth opportunities.
will continue exploring opportunities for sustainability-linked Key priorities for the coming year include expanding its footprint
liability products and ESG derivatives, in alignment with NBK’s in Europe and Asia. IBG will also focus on strengthening its
ESG commitment. risk management practices, optimizing costs, and leveraging
technology to enhance operational efficiency. Additionally, IBG
will continue to prioritize sustainability, aligning its operations
with global ESG trends and exploring opportunities in sustainable
Group Treasury Awards finance.

• Best Foreign Exchange Bank in Kuwait 2025

(Global Finance)

IBG Highlights

USD 57.4 billion USD 978.0 million USD 480.5 million

Total Assets Total Income Net Profit
9.8% YoY Growth 8.7% YoY Growth 8.1% YoY Growth

NBK Annual Report 2024

29
1 Strategic Review

Group CFO Review

Reflecting on the past year, I am pleased to report that 2024 was another remarkable year for the Group.
Despite significant headwinds in the global economic landscape, sluggish demand and increased geopolitical
tensions, NBK demonstrated remarkable resilience and strategic foresight. We successfully navigated
the turbulent environment to deliver a robust performance. While the GCC region saw positive economic
developments, particularly strong non-oil growth, the impact of geopolitical instability and oil price volatility
remained significant. Nevertheless, our commitment to excellence and prudent policies enabled us to
overcome these challenges and achieve outstanding results.

A Resilient Strategy The Group’s operating expenses increased by 9.7%

NBK has successfully navigated a dynamic and year-on-year to KD 468 million, reflecting NBK’s

KD 600.1
evolving financial landscape, leveraging its resilient commitment to expanding activity levels across
business model, diversification and expansion the Group‘s network and making strategic
million Net Profit strategy, conservative risk management practices, investments in key business lines and processes,
in 2024 and strong capitalization. The Group’s success digital technologies, and human capital. The
reflects its resilience and adaptability in the face Group’s cost to income ratio was 37.4%, reflecting
of shifting market dynamics. We have focused on NBK’s commitment to operational efficiency.
innovation and customer centricity, fortifying our Our operating surplus reached KD 783.2 million,

17.3% prospects for future growth. Our prudent approach

to risk management has enabled us to maintain a
representing a 5.8% year-on-year growth.

Capital Adequacy healthy balance sheet and achieve strong financial The Group remained committed to its conservative
Ratio as of performance. approach in managing credit exposures and its
31 December 2024 practice of setting aside precautionary general
A Strong Financial Performance provisions. Total credit provisions and impairment
The Group achieved a strong financial performance losses decreased from KD 103.1 million in 2023 to
in 2024, with net profits reaching KD 600.1 million KD 86.5 million in 2024.
(USD 1.9 billion), representing a 7% year-on-year
growth. These results stem from a strong operating A Healthy Balance Sheet
performance by the capital and demonstrate the The Group’s Balance Sheet remained healthy,
continued growth in our diversified business model. maintaining stable credit quality. As of end of
December 2024, total assets grew by 7.1% year-on-
Net operating income increased by 7.2% year-on- year to KD 40.3 billion, while loans and advances
year to reach KD 1.3 billion in 2024. This was reached KD 23.7 billion, up by 6.4% year-on-year
largely driven by higher net interest income which with loan growth in both conventional and Islamic
increased by 8.3% year-on-year to reach KD 980.1 banking in Kuwait as well as overseas. Investment
million in 2024 benefitting from growth in loans and securities also demonstrated strong growth,
investment securities and higher average interest increasing by 10.8% year-on-year to reach KD 7.6
rates compared to 2023. Non-interest income billion.
remained strong at KD 271.1 million, contributing
22% of the Group’s net operating income, driven by Customer deposits, at KD 22.9 billion, reflected a
solid fees and fx income across different lines of year-on-year growth of 4.2%, with the overall
business and operating locations. funding mix being stable and favorable for the
Group. The growth in our business volumes across
International Banking contributed 24% of the various segments reflects the trust and confidence
Group’s net operating income in 2024, while our customers place in the NBK brand. Credit
NBK Wealth contributed 9% . Consumer Banking quality remained strong with our NPL to gross
and Corporate Banking contributed 21% and loans ratio reaching 1.34% and our NPL coverage
13% respectively to the Group’s net operating ratio being 263% by the end of 2024, underscoring
income. The Group’s Islamic banking operations NBK‘s proactive and conservative risk management
contributed 20% of the Group’s net operating approach.
income, reflecting a strong growth in operating
surplus and lower provisions for credit losses.

NBK Annual Report 2024

Future Outlook term financial stability, and maintaining a vigilant focus on risk
Looking ahead, NBK remains steadfast in its pursuit of management. This proactive approach, coupled with our strong
sustainable growth and profitability while navigating the capital base and diversified business model, positions us to
dynamic economic landscape. We will proactively address navigate these challenges effectively and capitalize on emerging
potential challenges, including geopolitical and macroeconomic opportunities, while our focus on innovation will secure an
uncertainties, by optimizing capital and resources, ensuring long- inclusive and sustainable financial for future for all stakeholders.

2024 Op. Income by Type (%) Key Ratios (%) 2024 2023 2022
Others 2%
FX 3% Return on Average Assets 1.55 1.53 1.48
Return on Average Equity 15.1 15.0 14.3
Fees 17% Net Interest Margin 2.66 2.59 2.30
Non-interest Income as % of
21.7 22.4 25.1
Total Income
Cost to Income 37.4 36.6 38.2
NPL Ratio 1.34 1.38 1.42
Loan Loss Coverage Ratio 263 271 267
Common Equity Tier 1 Capital
13.2 13.0 12.9
Adequacy Ratio
Tier 1 Ratio 15.1 15.0 15.0
Capital Adequacy Ratio 17.3 17.3 17.4
Net Interest Income 78%

2024 Op. Income by Business Line (%) 2024 Total Assets by Business Line (%)
Others 4%
Others 13% Consumer 13%
Consumer 21%

Corporate 13%
Int'l Bkg 24%
Corporate 13%

NBK Wealth 3%

NBK Wealth 9% Int'l Bkg 44%

Islamic 20%
Islamic 23%

31
1 Strategic Review

Key Performance
Indicators
The delivery of NBK’s strategy is measured against Key The KPIs are categorized as ‘financial’ and ‘non-financial’. The
Performance Indicators (KPIs), which enable management and table summarizes our overarching KPIs and provides an overview
the Board to monitor progress towards strategic goals. of performance against them in 2024.

Dimension KPIs Objectives Performance 2024

Return on Assets • Gradually improve to 1.5% by 2025

Return on Equity • Gradually improve to low/mid teens
Profitability by 2025
Cost-to-Income Ratio • Maintain and closely manage below
40%

Core Asset Growth • Achieve mid/high single digit

Growth
growth rate
Financial
% of FX, fees and • Maintain ~ 22%
commissions to total
income
Resilience
% of Operating Surplus • Gradually improve to ~30% by 2025
from international (excluding any potential inorganic
business uplift)

Brand Awareness • Maintain NBK’s image as the

leading bank in Kuwait
Customer
Perception
Brand Power among youth • Maintain NBK’s Brand Power in
Kuwait and among Kuwaiti Youth

Ratings assigned by credit • Maintain NBK’s high LT credit rating

agencies
Market Perception Ratings and scores • Gradually improve ESG ratings and
assigned by external ESG scores
Non-financial*
raters

Market share in salaried • Defend market share

Maintaining Kuwaitis of NBK Kuwait
Leadership in
Kuwait Market share in corporate • Defend market share
assets of NBK Kuwait

Employee Employee Engagement • Maintain NBK’s status as a

Perception Survey preferred employer in Kuwait

Note: The objectives for the Bank’s KPIs assume the execution on gradual improvements in the political and economic stability
of the Government of Kuwait’s development plans towards the of the MENA region over time, provisions returning to pre-financial
long-term goals defined in New Kuwait 2035. They also depend crisis levels and no major acquisitions.

*Non financial Indicators progress is based on third Party assessments and Data.

NBK Annual Report 2024

33
1 Strategic Review

Risk Management
Risk Management is central to NBK’s strategic objectives, conditions, enabling the Bank to capitalize on opportunities and
ensuring the Bank’s long-term sustainability and profitability. By minimize potential losses.
proactively identifying, assessing, and mitigating a diverse range
of financial and non-financial risks, including credit, market, A Robust Risk Management Framework
liquidity, operational and technology, geopolitical, and ESG NBK’s risk management framework is rooted in strong governance,
and climate-related risks, the Group Risk Management (GRM) robust controls, and a culture of risk awareness. Our Board
contributes to the Bank’s resilience and safeguards its reputation. and Risk Committee play a pivotal role in setting the strategic
Through a robust risk management framework and a strong risk direction and ensuring compliance with regulatory standards. The
culture, the GRM empowers NBK to navigate complex market framework is built on a Three-Lines-of-Defense Model.

First Line: Day-to-day Risk Management Second Line: Risk and Control Oversight Third Line: Independent Assurance

Business Owners Group Risk Management (GRM) Internal Audit

The first line of defense, comprised The GRM sets risk appetites The Internal Audit function provides
of business owners, is responsible and risk-adjusted profitability independent, objective, reliable, and timely
for identifying and capturing key risk measures to control portfolio assurance to the Board, its Audit Committee,
indicators for both financial and non- quality. GRM also monitors and Group senior management, and regulators.
financial risks. In collaboration with the evaluates decisions related It assesses the effectiveness of governance,
Group Risk Management (GRM), business to new and existing deals, risk management, and control processes in
owners set policies, including risk impairments, provisions, and mitigating current and emerging risks, thereby
appetites and risk thresholds, to effectively other relevant risks. enhancing the overall control environment
manage these risks. within the Group.

Financial Risks 2025 Outlook

NBK will continue to prioritize stringent credit processes and
capital conservation, especially in light of evolving geopolitical
Credit Risk risks. While focusing on highly-rated economies, we recognize
Credit risk is NBK’s primary risk, arising from lending to various the challenges posed by the dynamic MENA region and industry-
customer segments and trading activities. The Bank applies specific shifts. Adapting to these changing conditions will be
standard lending principles used by leading global banks to crucial to maintaining a strong credit risk profile and seizing
assess and mitigate credit risk, ensuring the quality of its loan emerging opportunities.
portfolio and protecting the Bank’s financial stability.
Market Risk Management
Risk Management Approach NBK’s market risk exposure stems from various sources, including
The GRM Policy, established by the Board and senior trading book positions, banking book activities, and off-balance
management, ensures consistency in managing credit risk. sheet exposures. These sources expose the Bank to risks such as
This policy, along with operational standards, guides business- interest rate fluctuations, foreign exchange rate movements, and
specific and location-specific credit risk policies. Internal credit commodity price volatility. By effectively managing these risks,
risk ratings and lending limits are assigned based on thorough NBK aims to safeguard its financial stability and optimize its risk-
evaluations of customers’ financials and operating environments. adjusted returns.
Additionally, a robust credit risk appetite framework supports risk
monitoring and reporting processes for local Corporate Banking Risk Management Approach
Group, the International Banking Group, Consumer Banking NBK employs a comprehensive approach to market risk
Group, and NBK Wealth businesses. management, incorporating risk identification, measurement,
mitigation, and monitoring. The Bank identifies key market
2024 Highlights risk factors, including interest rate, foreign exchange (FX), and
NBK enhanced its end-to-end credit process through continuous commodity price risk. It utilizes various quantitative techniques,
reviews and improvements involving key stakeholders. Monitoring such as Value at Risk (VaR) and stress testing, to measure market
credit exposures, portfolio performance, and external factors risk exposures. To mitigate these risks, NBK employs strategies
were also crucial for effective risk management in 2024. Credit like diversification, hedging, and proactive liquidity management.
trends, including industry analysis and early warning alerts Continuous monitoring and reporting of market risk exposures
were reported to credit risk committees and the Board Risk and ensure that key risk indicators are regularly communicated to
Compliance Committee (BRCC), allowing for dynamic strategy senior management and the Board.
formulation.

NBK Annual Report 2024

2024 Highlights
NBK proactively addressed market volatility in 2024 by enhancing
Non-Financial Risks
Asset-Liability Management (ALM) practices, diversifying its
Operational and Technology Risk
investment portfolio, implementing effective hedging strategies,
NBK has implemented a robust framework that focuses on
conducting rigorous stress tests, and closely monitoring market
identifying, assessing, and mitigating a wide range of operational
trends. These measures aimed to optimize interest rate risk,
and technology risks, including cyber threats. By effectively
reduce concentration risk, mitigate adverse price movements,
managing these risks, NBK aims to safeguard its assets, and
assess the Bank’s resilience to market shocks, and proactively
ensure the long-term sustainability of its business.
adapt to changing market conditions. By effectively managing
market risk, NBK strengthened its financial position and protected
Risk Management Approach
its long-term profitability.
NBK employs a Three-Lines-of-Defense Model for operational
and technology risk management. Business units conduct
2025 Outlook
self-assessments, which are reviewed by the Operational &
NBK will focus on enhancing its risk management framework by
Technology Risk Management Team. Key risk indicators are
adopting automation, strengthening stress testing and scenario
monitored and reported to the Board Risk and Compliance
analysis, and integrating ESG factors. To capitalize on emerging
Committee (BRCC), in line with the Group Risk Appetite.
opportunities, such as technological advancements and market
Furthermore, NBK’s Information Security Management System
expansion, NBK will prioritize agility and continuous adaptation.
(ISMS) adheres to ISO 27001, PCI-DSS, and other leading
The Bank will proactively address challenges posed by increased
standards, ensuring rigorous compliance with both local and
regulatory demands and economic uncertainty by updating
international regulatory requirements.
processes and policies to ensure compliance and resilience.

2024 Highlights
Liquidity Risk
NBK effectively managed incidents and operational disruptions,
NBK’s liquidity risk arises from factors such as funding
with total net loss due to incidents in 2024 remaining within the
mismatches, counterparty risk, and regulatory changes. By
Bank’s Risk Appetite. Proactive security assessments and timely
effectively managing these risks, NBK aims to maintain a strong
issue remediation enhanced the Bank’s cybersecurity posture.
liquidity position and ensure its financial stability.
Regular monitoring and reporting ensured continuous oversight of
operational and technology risks.
Risk Management Approach
NBK maintains a robust liquidity risk management framework,
2025 Outlook
which is reviewed annually by the Board, to ensure the Bank’s
NBK plans to enhance its operational resilience management
ability to meet its funding and liquidity needs under various
processes to align with international practices. Key strategic
market conditions. The Bank’s liquidity management strategy is
priorities include integrating operational and technology risks
focused on maintaining adequate Liquidity Coverage Ratio (LCR)
into the digital transformation framework, employing agile
and Net Stable Funding Ratio (NSFR) levels.
methodology to mitigate risks from the pre-design phase through
project delivery, and continuously improving cyber defenses.
2024 Highlights
The Bank will also focus on managing third-party risks through
NBK prioritized liquidity management to navigate a challenging
standard risk assessments, legal reviews, and data privacy and
market environment marked by changing monetary policies and
security evaluations.
geopolitical tensions. Key initiatives included diversifying funding
sources, optimizing liquidity buffers, enhancing the liquidity
Geopolitical Risks
management framework, and strengthening monitoring and
NBK recognizes geopolitical risks as emerging risks. Geopolitical
reporting systems.
events can lead to financial instability affecting economic growth,
causing a deterioration in global and/or local economic and
2025 Outlook
market conditions, and affecting negatively the Group’s business
NBK will continue to diversify its funding base by onboarding new
international clients across various sectors and industries. This
diversification strategy aims to reduce concentration risk and
enhance the stability of the Bank’s funding profile.

35
1 Strategic Review

operations, profitability, and overall solvency.

Risk Management Approach Risk Management Approach
Geopolitical risks identification involves both the first and The Bank has developed formal systems to identify, assess,
second line of defense at NBK’s headquarters, international and manage ESG and climate-related risks. This involves policy
branches, and subsidiaries. The GRM, in collaboration with development, integrating climate risk into NBK’s risk policies
senior management, proactively detect, assess and monitor and governance framework, and conducting portfolio analysis to
emerging geopolitical risks, that may have a significant impact on understand the varying impacts of climate change risks on clients.
NBK’s business model, profitability, and solvency. Proactive risk
management is essential to avoid potential negative impact on, 2024 Highlights
and deviation from, targets, which is mitigated through proactive The Bank conducted a thorough assessment of how these risks
action plans tailored for distinct categories of emerging risks. could potentially impact its assets, including real estate loans
and collaterals. Demonstrating its commitment to proactive risk
2024 Highlights management, NBK integrated climate-related factors into its Pillar
In 2024, emerging geopolitical risks stemmed from, among other 2 capital calculations, ensuring a more resilient and forward-
geopolitical events, geopolitical tension in the Middle East, the thinking approach to safeguarding its financial stability.
continuing war in Ukraine, and the US elections. NBK effectively
managed these emerging risks. Proactive emerging risks 2025 Outlook
assessment and timely issue remediation enhanced the Bank’s NBK plans to upgrade its rating process to capture ESG and
emerging risk postures. Regular monitoring, combined with senior climate-related risk risks more effectively by developing an
management and BRCC reporting, ensured continuous oversight Environmental & Social Risk Management (ESRM) Framework. In
of emerging risks. line with the Kuwaiti Government plans, the Bank will develop a
sophisticated global-level transition plan aligned with individual
2025 Outlook market requirements. This will include adopting automation
NBK will continue its proactive approach to identifying emerging processes, enhancing stress testing and scenario analysis,
risks and drawing up responses and plans to enhance its and incorporating ESG and climate-related factors into its GRM
geopolitical risks resilience management processes, in alignment framework to address long-term sustainability risks.
with international practices. Key strategic priorities include
integrating emerging geopolitical risks into Pillar 2 risk capturing
and stress testing. The Future of Risk Management
ESG and Climate-Related Risks
at NBK
NBK recognized ESG and climate-related risks as emerging Group Risk Management will prioritize investing in our people,
risks in 2024, particularly focusing on physical risks such as embracing digital transformation, and integrating ESG factors into
severe weather events and floods. NBK Group is proactively our risk framework. By leveraging technology, enhancing our risk
addressing these risks within its operations and portfolio by management capabilities, and adapting to evolving regulatory
establishing governance committees, working in line with Central landscapes, we aim to mitigate risks, effective decision-making,
Bank of Kuwait (CBK) guidelines and government directives. By and contribute to NBK’s long-term success.
proactively addressing these risks, NBK enhances the Bank’s
resilience, ensures regulatory compliance, and supports long-term
sustainability.

NBK Annual Report 2024

37
1 Strategic Review

Cultivating a Culture of Excellence

through a Holistic HR Strategy
At NBK, the HR strategy is aligned with the Bank’s core values candidates with immersive experiences of the work environment;
to cultivate a culture of excellence, innovation, and employee setting NBK apart as an innovative employer.
well-being. This alignment ensures that the Bank’s workforce
contributes effectively to its strategic goals while embodying NBK is committed to attracting and cultivating top-tier talent,
the core principles that define the organization. Top talents are both locally and internationally. NBK effectively balances its
meticulously selected, with high performers being recognized commitment to innovation and national priorities by aligning its
through transparent evaluations. Training programs are designed Kuwaitization goals with the Bank’s strategic talent acquisition
to enhance service excellence and adaptability to technological needs, ensuring sustainable pipeline of skilled professionals
advancements. and contributing to national prosperity. By the end of the fourth
quarter of 2024, Kuwaiti nationals comprised 78.0% of the Bank’s
NBK’s commitment to its employees’ satisfaction and holistic workforce, with 92.3% of new hires being Kuwaiti citizens.
well-being is reflected in its initiatives prioritizing employee
health, safety, and financial stability. NBK champions diversity A Culture of Continuous Learning and Innovation
and inclusivity, actively supporting Kuwaiti talent. The Bank Aligned with its EVP of offering growth opportunities, NBK fosters
encourages employees to engage in CSR activities as well as a culture of continuous learning and innovation. In 2024, the Bank
embodying integrity and accountability, aligning with the Bank’s implemented a robust suite of mentoring and training programs
commitment to societal contribution and ethical standards. to equip its workforce with the necessary skills for a rapidly
By weaving NBK’s corporate values into HR strategies, the evolving industry. These included the NBK Mentoring Program for
Bank fosters a motivated, skilled, and values-driven workforce, high-potential employees and the Transcendence Leader Coach
solidifying its status as a leading financial institution. Program to enhance the coaching culture. Additionally, the NBK
Tech Academy helped to equip employees with cutting-edge
Forward-Thinking Talent Acquisition Strategies digital skills, while the second cohort of the NBK Rise remains
NBK stands out with its compelling Employee Value Proposition focused on empowering women leaders.
(EVP) centered on three transformative pillars: joining the Bank’s
legacy of success, thriving in an environment of professional NBK offered a variety of specialized training programs, including
excellence, and seizing opportunities for accelerated learning the NBK Prime and NBK Pioneers Program for its Sales and
and personal growth. NBK’s unwavering financial strength Distributions Divisions, and the Collective Executive Development
and esteemed reputation create a secure and fulfilling work Program for general managers, deputies, and selected functional
environment. Employees collaborate with top-tier professionals, heads. Specialized curriculum training sessions, tailored to
gain insights from industry experts, and enhance their capabilities employees’ technical development needs, were also conducted,
through robust training programs. By focusing on these three including Moody’s Credit Curriculums, Credit Administration and
pillars, NBK crafts an enriching and rewarding career journey Operations, Trade Finance Academy, and Data Analysis.
for every employee, enabling the Bank to attract and retain top
talents. NBK leveraged digital learning platforms to provide accessible and
flexible training opportunities. The NBK Learning Hub Platform
In 2024, NBK made significant strides in talent acquisition, was used to deliver dynamic and accessible e-learning programs,
emphasizing skills, potential, and alignment with the Bank’s and foster continuous professional growth and sustainable
values. By participating in career fairs, such as “Watheefti”, and learning opportunities for employees. By implementing these
launching the NBKConnect Program in universities, NBK actively various programs and initiatives, NBK significantly contributed
engaged with top talent; strengthening the Bank’s employer to the development of its workforce, reinforcing its EVP and
brand. Through the adoption of cutting-edge technologies, such solidifying its reputation as a forward-thinking employer.
as Virtual Reality (VR) Onboarding, NBK provided potential

Number of Global Employees: 8,294

Gender Repartition: Male 56.8%
Female 43.2% Nationalization Rate:%78.0

NBK Annual Report 2024

 NBK RISE: Empowering Women Leaders

NBK RISE, a pioneering initiative initially launched in 2022 international locations, as well as representatives from partner
by Shaikha Al-Bahar, Deputy Group CEO at National Bank of organizations, including Ooredoo Kuwait, Kuwait Banking
Kuwait (NBK), is designed to empower women leaders and Association (KBA), ABYAT, Kuwait Petroleum Corporation (KPC),
prepare them for senior leadership roles. This nine-month Gulf Bank of Kuwait, Markaz, J’s Bakery, and Intervest Capital
program comprises various modules focusing on essential Partners New York. With the launch of the second cohort,
competencies, confidence building, strategic initiative NBK continues to focus on empowering the next generation of
development, transformational leadership, and effective women leaders, ensuring that graduates are well-prepared to
decision-making. Participants benefit from mentorship, meet the demands of various industries.
coaching by industry leaders, and collaborative projects that
turn ideas into impactful outcomes. The program collaborates Creating a Sustainable Impact
with renowned institutions like IE Business School and INSEAD NBK RISE aims to create a sustainable impact on the industry
for world-class training. by fostering a diverse community of women leaders. Graduates
of the program will mentor aspiring female candidates in the
Building Momentum future, establishing a sustainable cycle for the program’s
The inaugural cohort in 2023 achieved remarkable success, continuity and impact. Efforts are made to invite participants
with all 21 participants completing the NBK RISE program. from diverse sectors to advance future female leaders toward
These participants included representatives from prominent higher leadership roles.
organizations such as Al-Shaya Group, Commercial Bank of
Kuwait, Burgan Bank, EQUATE Petrochemical Company, and Setting a Benchmark for Diversity and Inclusion
Kuwait Telecommunications Company (STC). The success Through NBK RISE, NBK is committed to promoting gender
of the first cohort was a testament to NBK’s commitment to diversity and empowering women to reach their full potential.
advancing diversity and inclusion, particularly in empowering The program has been recognized with multiple awards,
women leaders. including MERIT’s Special Recognition for Developing Women
Leaders in 2024 and the Bronze Award for Excellence in
Building on this success, the second cohort was launched Diversity and Inclusion from the Society for Human Resource
in 2024, with 25 participants from diverse professional Management Middle East & North Africa’s office in 2023.
backgrounds, including NBK employees in Kuwait and

The NBK Tech Academy: Nurturing Digital Leaders

Building upon the legacy of the successful NBK Academy, A Proven Success Record
which has been nurturing future leaders since 2008, NBK The inaugural wave of the NBK Tech Academy saw 10
launched the NBK Tech Academy in 2024 in recognition of the participants successfully completing the program. Over the
critical role of digital skills in shaping the future of banking. course of six months, these participants received intensive
The Tech Academy is a six-month intensive program, equipping training covering a diverse range of critical skills, including
fresh graduates with the technical expertise and professional FinTech, Data Analytics, Ethics in Technology, Cyber Security,
development necessary to innovate and thrive in the digital Fundamentals of Digital Payments, Digital Innovation, Artificial
age, aligning with NBK’s strategic vision of fostering innovation Intelligence, Scripting and Programming, Fundamentals of
and excellence. Codifications, and Finance for Non-Finance Professionals.
Following the training, the 10 participants were successfully
A Rigorous Path to Leadership placed within the Bank’s data and digital divisions.
NBK Tech Academy’s curriculum is designed to be both
comprehensive and innovative. Participants delve into the Shaping the Future of Banking
latest advancements in Artificial Intelligence, Data Analysis, The success of the inaugural phase underscores NBK Tech
Digital Transformation, Design Thinking, Codifications, Academy’s effectiveness in cultivating a new generation of
Scripting, and Programming. Participants gain valuable hands- digital leaders. Building on this success, NBK will continue
on experience through business inductions and on-the-job to invest in its Tech Academy, launching its second wave in
rotations, providing them with invaluable insights into the early 2025, to ensure a continuous pipeline of highly skilled
workings of NBK. talent to drive NBK’s digital transformation. By equipping the
next generation with the skills needed to navigate the digital
The selection process for NBK Tech Academy is rigorous, landscape, NBK is not only investing in its own future but also
ensuring that only the most talented and driven Kuwaiti contributing to the future of banking in Kuwait.
graduates with degrees in relevant fields are chosen. Candidates
undergo a comprehensive evaluation, including interviews,
psychometric assessments, and ability testing, to ensure they
possess the intellectual curiosity and drive to excel.

39
1 Strategic Review

Comprehensive DE&I and Employee Wellbeing Initiatives Driving Success Through Employee Engagement
A cornerstone of NBK’s commitment to employee well-being is NBK values employee engagement, satisfaction, and retention.
fostering a diverse and inclusive workplace. In December 2024, The Your Voice Matters Employee Engagement Survey, first
NBK launched a Group-level Diversity, Equity, and Inclusion launched in 2018 for NBK Kuwait, expanded in 2021 to all
(DE&I) Commitment Statement, supported by a comprehensive international locations, and in 2024 to the Group level including
DE&I Strategy aligned with the ESG Governance Framework. The NBK Wealth Management. The survey covers 21 categories,
statement underscores NBK’s dedication to creating an inclusive including the recently added “Employee Wellbeing” and “Diversity
environment where all employees can thrive and reach their full and Inclusion” categories. NBK partnered with Willis Towers
potential. By prioritizing diversity, equity, and inclusion, NBK aims Watson to ensure confidentiality and honest feedback. The survey
to cultivate a more inclusive and equitable workplace that reflects has a “Sustainable Engagement” score of 84%, well above the
the diverse communities it serves. global average.

In alignment with NBK’s ESG initiatives, with a focus on the Key highlights from this year’s survey, which had an 86%
social aspect, Group Human Resources (GHR) implemented a 60 response rate, include 93% of employees expressing pride in
minutes reduction on Thursday working hours. This is part of our being associated with NBK, and 86% feeling a sense of personal
continued commitment to enhancing employee well-being, which accomplishment. Additionally, 92% of employees expressed
is vital to the culture at NBK. This will enable NBK to also adopt their full support the values for which the Bank stands, and 84%
market trends that would attract and retain talent and promotes strongly believed in its goals and objectives. NBK also addressed
the concept of a balanced work-life approach, aligning with our performance management and feedback through an automated
objectives to enhance employee satisfaction and well-being. Staff Complaints & Grievance System, ensuring employees’
concerns are addressed promptly, fostering a transparent,
NBK also prioritizes health and safety, fostering a supportive responsive work environment that boosts employee satisfaction
work environment for the mental, physical, and financial and retention.
well-being of its employees. In 2024, several initiatives were
introduced to support employees’ physical well-being. One Roadmap to HR Excellence
notable initiative was the November Health Campaign, raising Moving forward, NBK’s Group HR is gearing up for transformative
critical awareness about diabetes and prostate cancer. This changes. In 2025, a new DE&I strategy will be implemented to
campaign featured specialized screenings, consultations foster a more inclusive and equitable workplace. Innovation will
with health experts, and a heart health seminar at NBK’s be included as a key job evaluation criterion, ensuring employees
headquarters. Such efforts highlight NBK’s unwavering are recognized and rewarded for their contributions to the Bank’s
commitment to employee wellbeing, creating a healthier and forward-thinking initiatives. NBK’s new job architecture project will
more engaged workforce. unify HR job structures across all NBK locations, based on similar
methodologies and a consistent title framework, positioning NBK
Reflecting its unwavering support and comprehensive approach as a global bank with harmonized multinational practices.
to employees’ wellbeing, NBK provides unique benefits alongside
competitive compensation packages to ensure its employees’ Digital innovation will take center stage, with a focus on predictive
financial wellbeing. Employees benefit from special rates for analytics to enhance talent sustainability and development. ESG
Employee Term Deposits and the Al-Jawhara Saver Account, with initiatives will be prioritized to ensure sustainable and responsible
features like monthly and quarterly prize draws to encourage HR practices. By embedding these strategic initiatives, NBK
saving. Additionally, NBK offered Interest-Free Loans to its aims to create a more resilient, diverse, and forward-thinking
employees for the second consecutive time. organizational culture, fostering a motivated and values-driven
workforce ready to tackle future challenges and opportunities.
These initiatives, coupled with competitive compensation
packages and benefits, demonstrate NBK’s holistic approach
to employee well-being, not only ensuring the mental, physical,
and financial wellbeing of its employees, but also fostering
a thriving, motivated, and loyal workforce. In recognition for
its initiatives, NBK received the Gold Award for “Excellence in
Health and Wellbeing” from the prestigious Society for Human
Resource Management (SHRM) at the SHRM MENA STAR Awards
in 2024.

NBK Annual Report 2024

41
1 Strategic Review

ESG
A Holistic Approach to ESG and inclusive economy. In this context, NBK introduced its
Sustainable Financing Framework in 2022, aiming to govern the
NBK’s holistic approach to Environmental, Social, and Governance Bank’s sustainable debt issuance. To adopt a holistic approach,
(ESG) is deeply rooted in its comprehensive ESG Strategy, NBK committed to grow its sustainable assets to USD 10 billion by
which aligns with national and globally recognized frameworks 2030 through lending and investing in sustainable projects.
and standards. The Group ESG Strategy, launched in 2023,
is anchored on four key pillars: Governance for Resilience, In 2024, NBK successfully issued its debut USD 500 million Green
Responsible Banking, Capitalizing on Capabilities, and Investing Bond, the first green bond out of Kuwait. Through this landmark
in Communities. The ESG Strategy further solidified the Group’s transaction, NBK aims to scale its investments in projects with
commitment to sustainability, ensuring a robust, transparent, and clear environmental and climate benefits. As Kuwait’s leading
measurable approach to achieving its goals. financial institution, NBK’s focus on sustainable finance enables
the Bank to enhance business resilience, increase sustainable
As a financial institution, NBK recognizes the vital role financial financial returns and to support our clients and customers in their
institutions play in driving sustainability by channeling capital transition.
towards projects that support the transition to a more resilient

Alignment with National and Global Frameworks

Boursa Kuwait ESG Reporting Guidelines GHG Protocol

Partnership for
New Kuwait Vision 2035 Carbon Accounting
Financials (PCAF)

Global Reporting Initiative (GRI) Standards UN Global Compact (UNGC)

UN Sustainable Development Goals Sustainability Accounting Standards

(UN SDGs) Board (SASB)

Setting a New Benchmark by Joining PCAF associated with its financing activities in a standardized manner,
supporting informed decision-making and providing stakeholders
In April 2024, NBK set a new benchmark by becoming the first with transparent and reliable metrics to monitor progress in
bank in Kuwait and the sixth in the MENA region to join the implementing the Bank’s ESG Strategy. Joining PCAF will enable
Partnership for Carbon Accounting Financials (PCAF), which NBK to decarbonize its portfolio in the longer term by aligning with
grew to a total of 15 signatories from the MENA region by the end global trajectories, setting targets, identifying high-impact sectors,
of 2024. This milestone places NBK at the forefront of regional and unlocking potential opportunities to further support clients.
sustainability efforts, showcasing its leadership in environmental NBK is currently undertaking financed emissions calculations
responsibility. PCAF, a global initiative, is dedicated to measuring associated with its lending portfolio to establish a baseline
and disclosing greenhouse gas (GHG) emissions associated with measurement. This will further support our engagements with
lending and investment portfolios, ensuring a transparent and our clients, providing them with more fit-for-purpose sustainable
accountable approach to financial services. finance propositions and solutions to transition their operations
to net-zero.
By joining PCAF, NBK took a major stride toward enhancing
its capability to identify, measure, and disclose emissions

NBK Annual Report 2024

A Milestone in Sustainable Finance: NBK’s Debut leading to new businesses, products, and clients. Driven by
Green Bond our commitment to advance sustainable finance, NBK has also
achieved remarkable progress in its sustainable finance journey,
In June 2024, NBK achieved a significant milestone by issuing reaching USD 4.97 billion in sustainable assets as of 31 December
its inaugural USD 500 million Green Bond, a landmark move 2024. This progress brings the Bank closer to its ambitious goal of
that solidified its position as a leader in sustainable finance. USD 10 billion in sustainable assets by 2030.
The inaugural Green Bond will fund projects focused on climate
change mitigation, such as green buildings, renewable energy, and 2024 Awards
clean transportation, contributing to the global effort to combat
climate change and reinforcing NBK’s role as a key player in
promoting environmental and social sustainability. Best Bank for ESG-Related Loans in
the Middle East
We perceive sustainable finance as a unique opportunity,

NBK’s Green Bond Initiative: A Balancing Growth and Green Initiatives

NBK’s green bond initiative represents a harmonious blend
Catalyst for Sustainable Finance of growth and environmental responsibility, with the funds
raised being allocated to projects contributing to climate
NBK reinforced its position as a regional leader in sustainable change mitigation initiatives and technologies. Furthermore,
finance by issuing the first green bond out of Kuwait in June the successful issuance of these bonds strengthens NBK’s
2024, a landmark USD 500 million Green Bond. Aligned with financial profile by diversifying its funding sources, improving
its Sustainable Finance Framework, this landmark initiative its credit rating, and enhancing its foreign currency liquidity.
represents one of the largest green bond offerings from a This strategic move positions NBK as a leading force in
conventional financial institution in the MENA region in 2024. sustainable finance, driving positive environmental and
economic impact.
Global Trust in NBK’s Green Bond
NBK’s green bond issuance attracted significant global Shaping a Sustainable Future
interest, with strong demand from investors across North Moving ahead, NBK remains steadfast in its dedication
America, Europe, and Asia. Oversubscribed by three times, to driving innovation within the sustainable finance
this landmark achievement underscores the market’s trust in landscape. The inaugural green bond allocation report,
NBK’s creditworthiness and its commitment to environmental scheduled for release in June 2025, will showcase the
sustainability. The diverse investor base, comprising asset tangible environmental impact of investor contributions. By
managers, banks, and institutional investors, highlights the transparently disclosing how proceeds are financing eligible
global appeal of NBK’s sustainable finance initiative. By green projects, we aim to foster long-term partnerships with
successfully mobilizing capital for sustainable projects, NBK investors who share our vision for a sustainable future. As NBK
reinforces its position as a leading financial institution driving continues to innovate and adapt to the evolving landscape
positive environmental and social impact in the region. of sustainable finance, it is poised to play a pivotal role in
shaping the future of the region by mobilizing the necessary
capital to drive the transition.

2%
5%
Highlights
18%

USD 500 1st

green issuance
million Green Bond
out of Kuwait
49%
26%

5.5% 3x +95 bps

Coupon Rate Oversubscribed over US Treasuries

USA Middle East UK Europe Asia

43
1 Strategic Review

Building a Sustainable Legacy

In 2024, NBK distinguished itself through its unwavering commitment ESG Ratings
to sustainability, exemplifying a strong dedication to environmental
stewardship. The new Group ESG Policy, approved by the Board
in 2024 and published on the Group’s website, provides a robust
framework to guide NBK’s sustainability journey. This is being
supplemented with topic-specific policies, operating procedures,
and guidelines to support effective implementation across the Bank.

Developing Robust ESG Risk Governance

The Bank is currently developing an Environmental and Climate Score 20.8 (Medium risk), significantly improved from 27.1
Change Policy and an Environmental and Social Risk Management
(ESRM) Framework in order to implement a robust ESG risk
governance structure, and rigorous methods to identify, assess,
manage, and report on all types of ESG and climate-related risks.

A thorough ESG Risk Materiality Assessment was conducted

to identify high-impact and carbon-intensive sectors within NBK’s rating at ‘BBB’ per the MSCI audit
the Bank’s portfolio. The insights from this assessment
were instrumental in developing an ESG Scorecard to assess
climate change and ESG-related risks at the obligor level, using
a formalized approach for collecting clients’ ESG data and
promoting enhanced disclosure practices in Kuwait.

The ESG Scorecard is designed to help business groups identify “C” score for 2024 for both the Climate Change
opportunities to further support NBK’s clients in their sustainable and Forests Categories
transition activities and investments. Consequently, NBK has
developed a scientific methodology for incorporating climate
change risks into the Pillar II Assessment of the Capital Adequacy
(ICAAP) regulatory report.

Additionally, NBK has initiated alignment with the recommendations Listed on FTSE Arab Federation of
of the Taskforce for Climate-related Financial Disclosures (TCFD), Capital Markets Low Carbon Select Index
by conducting a comprehensive current-state assessment and
developing its first TCFD report to be published during 2025.

Reducing Operational Environmental Footprint

In 2024, NBK demonstrated a strong commitment to minimizing Constituent of the
its operational environmental impact. The Bank installed solar FTSE4Good Index Series
panels in 18 local branches and completed the integration of the
Building Energy Management System (BEMS) in 39 branches. The
Bank’s efforts put it on track to achieve its interim target of a 25%
reduction in gross operational emissions by 2025 and ultimately
reach carbon neutrality by 2060.

Continuous Progress and Recognition

NBK’s sustainability journey is characterized by continuous Scored 39/100 in S&P Global rating
progress, earning positive ratings from leading agencies. At
the heart of this success is NBK’s unwavering commitment
to sustainability, governed by the modular ESG Governance
Framework, launched in 2023, which empowers the Board of NBK Headquarters awarded
Directors with increased oversight on the Bank’s sustainability the Gold LEED Certification
initiatives and progress. The Sustainability and Climate Change
Committee, which heads the ESG Governance Framework, is
chaired by the Vice Chairman & Group CEO, Isam Al-Sager, who
has been recognized by Forbes as the top sustainability leader in
Kuwait and the third in the Middle East.

NBK Annual Report 2024

Driving Sustainability Through Responsible Hospice (BACCH), Center 21 for Special Needs, and the Kuwait
Procurement Diving Team, to support youth development, healthcare, and
environmental conservation initiatives. These efforts collectively
NBK is committed to responsible procurement, driving highlight NBK’s dedication to fostering sustainable development,
sustainable practices throughout its supply chain. In 2024, the protecting the environment, and driving positive change in the
Bank developed a robust Group-level Sustainable Procurement community.
Strategy Framework. The Framework was published on the
Group website and disseminated to NBK’s international branches
and subsidiaries to foster a unified approach to sustainable 2024 Awards
procurement practices.

NBK has also incorporated ESG principles into NBK Kuwait’s Best Bank for SMEs in Kuwait
Procurement Policy as well as the Supplier Code of Conduct. The
Supplier Code of Conduct was published on the Group’s website,
promoting high ethical standards among suppliers, mitigating
third-party ESG-related risks, and fostering positive change across
the entire supply chain. By prioritizing sustainable sourcing,
NBK aims to reduce its environmental impact, promote social
responsibility, and ensure ethical business practices.
Fostering DE&I and Employee Wellbeing

In line with its commitment to fostering a diverse and inclusive

Upon formalization of the Sustainable Procurement Policy,
workplace, NBK launched a Diversity, Equity, and Inclusion (DE&I)
NBK forged a partnership with DHL, to use DHL’s “GoGreen
Commitment Statement on the Group-level. The commitment
Plus” service to transport all its international shipments using
statement, which was published on the Group website in
Sustainable Aviation Fuel. This transition leads to a substantial
December 2024, will be supported with a comprehensive DE&I
reduction in carbon emissions. The Bank has also introduced a
Strategy and specific targets across the three pillars of DE&I. The
“Go Green” function in the E-Purchasing system to encourage
Bank’s new DE&I Strategy will be implemented in 2025.
sustainable purchasing decisions.

NBK has aligned its DE&I approach with the United Nations
Dedication to Positive Social Impact
Sustainable Development Goals, particularly SDG 5 (Gender
Equality) by addressing disparities and fostering equal
NBK’s dedication to making a positive impact on society is
opportunities for all and SDG 10 (Reduced Inequalities)
evident through its commitment to financial inclusion and its
by ensuring equal employment opportunities, eliminating
impact-driven corporate social responsibility (CSR) initiatives.
discriminatory behaviors, and cultivating an inclusive workplace.
In 2024, NBK further solidified its commitment to financial
inclusion by supporting small and mid-sized businesses through
NBK has also developed an Employee Grievance Policy and a
innovative solutions, continuous performance monitoring, and
formal escalation mechanism, to create a safe and equitable
comprehensive financial advisory services. The Bankee program
working environment for all employees. NBK published the
also played an instrumental role in enhancing financial literacy
Employee Grievance Policy on its Group website to foster
among students in Kuwait, equipping them with essential
transparency and promote enhanced disclosure practices.
economic skills and knowledge to foster long-term financial
These initiatives underscore NBK’s efforts to address employee
stability and independence.
concerns effectively and ensure a supportive workplace culture.
NBK’s community investments reached around KD 30 million
(USD 97 million) in 2024, marking a 9% increase from 2023. 2024 Awards
This substantial investment underscores NBK’s unwavering
commitment to societal welfare and sustainable development. By
reviewing and updating its CSR Policy to align more closely with
Best Bank for Diversity and Inclusion in
the UN Sustainable Development Goals (SDGs) and the Group
Kuwait
ESG Strategy, NBK ensures a more impact-driven approach to its
community efforts.

NBK established various unique partnerships with strategic

organizations in 2024, including the Lothan Youth Achievement Gold Award for Excellence in
Center (LOYAC), the Kuwait Association for the Care of Children Health and Wellbeing
in Hospital (KACCH), the Kuwait Red Crescent Society (KRCS),
Omniya, Creative Confidence, Bayt Abdullah Children’s

45
1 Strategic Review

Empowering Future Leaders In recognition of the evolving regulatory landscape, NBK

is continuously aligning its operations with international
In 2024, NBK launched a series of impactful initiatives focused on sustainability standards, including the Partnership for Carbon
empowering young minds and preparing them for the future. NBK Accounting Financials (PCAF) and the Taskforce for Climate-
expanded its Bankee financial literacy program, which aims to related Financial Disclosures (TCFD). This proactive approach
equip students with essential financial skills, reaching 61 schools, positions NBK to effectively navigate emerging standards, such
32,235 students, and 7,335 teachers. NBK also continued to as the International Financial Reporting Standards (IFRS) and the
support youth development through LOYAC’s “Kilma” Program, International Sustainability Standards Board (ISSB) and enhance
enhancing debate and critical thinking skills. its reporting to investors. NBK will be disclosing the results of the
pilot assessment of its Group-level corporate portfolio as part of
NBK’s commitment to cultivating local talent is exemplified the Bank’s inaugural TCFD report.
through its comprehensive development programs, which include
NBK Academy, NBK Tech Academy, and Tamakan, offering Furthermore, NBK is committed to delivering innovative
professional training and development opportunities for recent sustainable finance solutions for its clients. By offering access
graduates. Additionally, the newly launched digital program, to sustainable financing options and aiding their transition to
in collaboration with Zain and the Kuwait Foundation for the a low-carbon economy, NBK plays a pivotal role in directing the
Advancement of Sciences aims to foster digital skills among green bond proceeds towards impactful environmental projects.
youth and university graduates. These initiatives collectively This effort supports the Bank’s goal of reaching USD 10 billion
ensure that youth are equipped with the knowledge, skills, and in sustainable assets by 2030. In parallel, NBK’ commitment to
opportunities necessary to thrive and excel as leaders in an achieve carbon neutrality by 2060 reflects its holistic approach
ever-evolving landscape. to sustainability, ensuring that both its financial offerings and
operational practices contribute to long-term environmental
The Road Ahead: Next Steps in NBK’s ESG perseveration and social resilience.
Journey

NBK is actively advancing its sustainability approach through

an ambitious ESG strategy, climate-resilient risk management
framework, and a commitment to align with global standards
and best practices. The Bank is developing a comprehensive
Environmental & Social Risk Management (ESRM) Framework
to integrate ESG factors into its credit and investment policies,
ensuring that sustainability is deeply embedded in NBK’s
business strategy, decision making, and risk management
practices. The ESRM Framework is expected to be finalized by
mid-2025, which NBK aims to provide tangible evidence about in
future disclosures.

NBK Annual Report 2024

47
 Governance

NBK is aligned with

international best practice in
Corporate Governance.
It is the responsibility of the
Board of Directors and its
Committees to ensure that
regulatory, compliance and
ethical standards are upheld
across the Bank and its
subsidiaries.

NBK Annual Report 2024

49
2 Governance

Board of Directors

Mr. Hamad Mohamed Mr. Isam Jassim Al-Sager Mr. Yacoub Yousef
Al-Bahar Vice Chairman and Al-Fulaij
Chairman Group Chief Executive Officer Board Member

Mr. Al-Bahar has been a Board Mr. Al-Sager joined the Bank in 1978 Mr. Al-Fulaij has been a Board
Member of NBK since 2005 and and was appointed as GCEO in March Member of NBK since 1998 and was
Chairman of the Board since March 2014. He joined the Board in March General Manager at the Bank from
2022. He is Chairman of Board 2022 where he was elected as Vice 1983 to 1998. He is also a member
Corporate Governance Committee Chairman. He had previously served of the Board Credit Committee
and the Board Credit Committee. as Deputy Group Chief Executive and Board Corporate Governance
Mr. Al-Bahar sat on the Board of the Officer since 2010. He is a member of Committee. Mr. Al-Fulaij has broad
Kuwait Investment Company from the Board Credit Committee. experience of banking activities,
1981 to 1991, where he served as Mr. Al-Sager serves as the Chairman including Risk Management and
Chairman and Managing Director. or member of several of the group’s Internal Controls.
He also served as Managing Director management committees. He is Mr. Al-Fulaij holds a Bachelor of Arts
of the Bank of Bahrain and Kuwait. Chairman of the board of NBK degree in Business Administration
He has extensive experience in (International) PLC and serves on from the University of Miami, USA.
Investment Banking and Asset the board of directors of Watani
Management, in addition to internal Wealth Management (Kingdom of
controls. Saudi Arabia). Mr. Al-Sager is a board
Mr. Al-Bahar holds a Bachelor of member of MasterCard. He was the
Arts degree in Economics from Chairman of National Bank of Kuwait
Alexandria University, Egypt. – Egypt until May 2019 and a Vice
Chairman of the Turkish Bank and
Board member of Watani Holding and
NBK Trustees (Jersey) Limited. Mr.
Al-Sager enjoys an extensive banking
experience at NBK and has played a
major role in turning the Bank into a
leading regional institution with a wide
international presence.
Mr. Al-Sager holds a Bachelor of
Science degree in Business
Administration from California State
Polytechnic University, United States

NBK Annual Report 2024

 Mr. Muthana Mohamed Mr. Haitham Sulaiman Mr. Emad Mohamed
Ahmed Al-Hamad Hamoud Al-Khaled Al-Bahar
Board Member Board Member Board Member

Mr. Al-Hamad has been a Board Mr. Al-Khaled has been a Board Mr. Al-Bahar joined NBK as a Board
Member of NBK since 2007. He Member of NBK since 2010. He is Member in August 2014, following
is also a member of the Board also a member of the Board Audit the passing away of the former
Nomination and Remuneration, Committee, Board Risk Chairman, Mr. Mohamed Abdul
the Board Audit, the Board Risk & Compliance Committee and Rahman Al-Bahar. He is also a
and Compliance Committee and the Board Nomination and member of the Board Nomination
the Board Corporate Governance Remuneration Committee. and Remuneration Committee and
Committee. Additionally, Mr. Mr. Al-Khaled has been a Board the Board Credit Committee.
Al-Hamad is the Vice-Chairman Member of Al Shall Investments Mr. Al-Bahar is the Chairman of
of Alwatyah United Real Estate Holding Co. since 2005 and Al Arjan Dar Labit Holding since 2015 and a
International Real Estate Company
Company and was Chairman of Member of the Executive Board of
since 2010, where he has been
Future Communication Company Al-Bahar Group, one of the oldest
Chairman since 2014.
International from 2005 to 2014. trading conglomerates in Kuwait and
Mr. Al-Khaled is also a Board
He was previously a Board Member the Middle East. In addition to his
member of Rasameel Investments
of the Arab European Company role on the Executive Board and in
Co. since 2016 and Kuwait
for Financial Management (AREF) the strategic decision-making team
Insurance Co. since 2019 and at
from 1987 to 1993, and served on at Al-Bahar, he is a Board Member of
ACICO Industries Co. since 2021.
the Board of the Commercial Bank Mr. Al-Khaled previously held the Al Ahlia Insurance Company Kuwait
of Kuwait from 1993 to 1997, as following positions at the leading since 1999 and the Vice-Chairman
well as the United Bank of Kuwait telecom operator, Zain: Chief since 2017 and served on the Board
(London) from 1996 to 1997. He has Business Development Officer, of the Gulf Bank from 1992 to 1994.
considerable experience in Finance Chief Executive Officer for the Mr. Al-Bahar holds a Bachelor’s
and Business Economics. Middle East and Chief Strategy and degree in management from the
Mr. Al-Hamad holds a Bachelor Business Planning Officer, amongst American University in Washington
of Arts degree in Economic and other responsibilities. He has DC, USA.
Political Science from Kuwait extensive experience in strategic
University. planning, investments, mergers and
acquisitions, corporate governance
and internal controls.
Mr. Al-Khaled holds a Bachelor of
Science degree in Electronic
Engineering from Kuwait University.

51
2 Governance

Board of Directors (continued)

Mrs. Huda Mohammad Dr. Robert Dr. Nasser Saidi

S. Al-Refaei Maroun Eid Independent Board Member
Board Member Independent Board Member

Mrs. Al-Refaei has been a Board Dr. Eid has been an Independent Dr. Saidi has been an independent
member since March 2022. She Board member since March 2021. Board member since March 2021.
is a member of the Board Risk He is the Chairman of the Board He is a member of the Board Audit
and Compliance Committee and Risk and Compliance Committee. Committee.
the Board Corporate Governance He is also a member of the Board Dr. Saidi was the Minister of
Committee. Audit Committee. Economy and Trade and Minister
Mrs. Al-Refaei worked as a risk Dr. Eid has served as a Managing of Industry of Lebanon between
management officer at the Bank Director & Chief Executive Officer 1998 and 2000. He was the first
from 1999 to 2003. She served of the Arab National Bank in Saudi Vice-Governor of the Central Bank
as a board member of Posta Plus Arabia from 2005 till January 2021. of Lebanon for two successive
Company from 2008 to 2012 and as He also spent over 22 years with mandates, from 1993 to 2003.
a senior lawyer at Abdullah the National Bank of Kuwait as head He is the former Chief Economist
Al-Refaei Legal Consultancy & Law of International Banking Group in and Head of External Relations of
Firm from 2009 to 2019. addition to serving as a Managing Dubai International Financial
Mrs. Al-Refaei holds a Bachelor’s Director & Chief Executive Officer Centre and Executive Director of the
degree in Industrial and Systems of the National Bank of Kuwait Hawkamah-Institute for Corporate
Engineering from Kuwait University, (International) PLC from 1998 till Governance. He is the Founder and
Kuwait and a Bachelor of Law 2005. He has nearly four decades of Chair of the MENA Clean Energy
degree from Cairo University, Egypt. international experience in banking. Business Council.
Dr. Eid holds a PhD in Money & Dr. Saidi holds a PhD and a MA
Banking from Sorbonne University, in Economics from the University
France. of Rochester in the USA, a M.Sc.
from University College, London
University, United Kingdom and a
BA from the American University of
Beirut, Lebanon.

NBK Annual Report 2024

 Mr. Abdulwahab Mr. Farouk Ali Akbar
Ahmad Al-Bader Bastaki
Independent Board Member Independent Board Member

Mr. Al-Bader has been an Mr. Bastaki has been an Independent

Independent Board member since Board member since March 2022. He is
March 2022. He is the Chairman the Chairman of the Board Audit
of the Board Nomination and Committee and a member of the Board
Remuneration Committee and a Risk and Compliance Committee.
member of the Board Corporate Mr. Bastaki held a number of senior
Governance Committee. positions including member of the
Mr. Al-Bader held a number of senior Board of Directors and Managing
positions at Kuwait Fund for Arab Director of the Kuwait Investment
Economic Development from 1977 Authority, Chairman of the Board of St.
to 2021, with the most recent being Martins Property Group (London) and
the General Manager from 2005 Chairman of the Board of Directors
to 2021. He was also the alternate of National Technology Enterprises
governor for the State of Kuwait to Company. Mr. Bastaki previously
the OPEC Fund for International served as board member of Gulf
Development from 1981 to 1986, Bank, an independent board member
governor from 1986 to 2014 and of Mabanee Co. and board member
Chairman of the governing board of the Kuwait Fund for Economic
from 2014 to 2021. He has also Development in addition to a
been a director of various entities. membership in Fosterlane (USA). He
Mr. Al-Bader holds a Bachelor of has extensive experience
Arts degree from Whittier College, for more than 33 years in finance,
USA. alternative investments and real estate
investments locally and internationally.
He also has deep knowledge in internal
audit, risk management, governance,
compliance and anti-money laundering.
Mr. Bastaki holds a Bachelor’s degree
in Industrial Engineering from University
of Miami, USA.

53
2 Governance

Executive Management

Mr. Isam Jassim Al-Sager Mrs. Shaikha Khaled Al-Bahar

(Vice Chairman & Group Chief Executive Officer) (Deputy Group Chief Executive Officer)

Mr. Al-Sager joined the Bank in 1978 and Mrs. Al-Bahar has been the Deputy Group
was appointed as Vice Chairman & GCEO Chief Executive Officer since March 2014.
in March 2022. He had previously served She is a member of various Management
as Group Chief Executive Officer since Committees. She is the Chairperson of
2014. He is a member of the Board Credit NBK Egypt, NBK France and NBK Lebanon.
Committee. Mr. Al Sager serves as the Mrs. Al-Bahar serves on the Board of NBK
Chairman or member of several group’s (International) PLC, United Kingdom, NBK
management Committees. Global Asset Management Limited and
Mr. Al-Sager is the Chairman of the Board Turkish Bank. Mrs. Al-Bahar has experience
of NBK (International) PLC and serves on in project finance, advisory services, bond
the Board of Directors of Watani Wealth issues, Build/Operate/ Transfer financing
Management (KSA). Mr Al-Sager is a and Initial Public Offerings. She holds a
Board member of MasterCard. He was the Bachelor of Science degree in International
Chairman of National Bank of Kuwait – Marketing from Kuwait University, and has
Egypt, Vice Chairman of The Turkish Bank attended specialized programs at Harvard
and Board member of Watani Holding and Business School, Stanford University,
NBK Trustees (Jersey) Limited. Wharton School and Duke University (USA).
Mr Al-Sager enjoys an extensive banking
experience at NBK and has played a
major role in turning the Bank into a
leading regional institution with a wide
international presence.
Mr. Al-Sager holds a Bachelor of Science
Degree in Business Administration from
California State Polytechnic University,
USA.

NBK Annual Report 2024

 Mr. Salah Yousef Al-Fulaij Mr. Sulaiman Barrak Al-Marzouq
(Chief Executive Officer – Kuwait) (Deputy Chief Executive Officer – Kuwait)

Mr. Al-Fulaij joined NBK in 1985 and has Mr. Al-Marzouq joined NBK in 2002 and
been the Chief Executive Officer – Kuwait now he is the Deputy Chief Executive
since 2015. He is a member of various Officer – Kuwait since 2017. He moved to
Management Committees. Mr. Al-Fulaij the Central Bank of Kuwait from 2012 to
serves on the board of NBK France and 2015, where he headed the Department
NBK Capital. He was the Chief Executive of Foreign Operations, before moving back
Officer of NBK Capital from 2008 to 2014, to NBK as Group Treasurer. Mr. Al-Marzouq
and previously Group General Manager of serves on the board of NBK Egypt, NBK
Treasury and Investments Services. Mr. Capital and Hayat Investment Company.
Al-Fulaij is a graduate of the University of He is a member of various Management
Miami, where he received his Bachelor’s Committees. He has extensive experience
Degree in Industrial Engineering and his in Investment and Wealth Management,
MBA in Business Management. He has in addition to experience in Treasury and
participated in a number of executive Banking Operations. He has served as
programs at Harvard Business School, a Board Member for several banks and
Stanford Graduate School of Business, and companies in Kuwait. Mr. Al-Marzouq holds
Duke University (USA). a bachelor’s degree in Economics from
Portland State University, USA

55
2 Governance

Executive Management (continued)

Mr. Faisal Abdulatif Mr. Omar Bouhadiba Mr. Mohammed Al Othman

Al-Hamad (CEO International (Chief Executive Officer of Consumer
(CEO of NBK Wealth) Banking Group) & Digital Banking for the Group)

Mr. Al-Hamad has been the CEO of Mr. Omar Bouhadiba joined NBK Mr. Mohammed Al Othman joined
NBK Wealth Management since April in November 2020 as CEO of NBK Group in 2006 and has been
2021. He serves as the Chairperson International Banking Group. Chief Executive Officer of Consumer
of NBK Capital, in addition to Mr. Bouhadiba serves on the & Digital Banking for the Group since
serving as a board member Board of NBK (International) PLC, May 2023. Prior to that he was Head
on several other NBK Group United Kingdom , NBK Egypt and of Consumer Banking Group since
entities, and a member of various NBK France. He has an extensive April 2018. He is also a member of
Management Committees. Prior to experience in corporate and various Management Committees.
that, Mr. Al-Hamad was the CEO of investment banking, with Bank Mr. Al Othman is the Chairman
NBK Capital and held several senior of America, Mashreq Bank, NBK, of the Shared Electronic Banking
positions there since joining in Arab Bank plc and most recently Services Company (K-Net) and a
2007. Mr. Al-Hamad has previously with Barwa Bank as Senior Advisor member since 2014. Mr.
held several senior positions in to the Board of Directors and Al Othman has extensive expertise
leading organizations, including International Bank of Qatar as Chief in retail banking, Digital Banking,
General Manager at Agility Kuwait Executive Officer. Mr. Bouhadiba personal banking, payment services
and Associate Director at Wellington holds a Master’s Degree in Business and banking products. Mr.
Management International in the Administration (MBA) in Finance Al-Othman holds a Bachelor’s
UK. Mr. Al-Hamad holds an MBA from the Wharton School of Finance Degree in Philosophy from Kuwait
from Harvard Business School of the University of Pennsylvania University and has attended
and a Bachelor’s Degree from the (USA). several training programs at
University of Chicago. Harvard Business School, Columbia
Business School and Insead.

NBK Annual Report 2024

Mr. Mohammed Al Kharafi Mr. Sujit Ronghe Mr. Grant Lowen
(Chief Operating Officer- Head of (Group Chief Financial Officer) (Group Chief Risk Officer)
Operations and Information
Technology for the Group)
Mr. Ronghe joined the Bank in 2002 Mr. Grant Lowen joined NBK in 2024
Mr. Mohammed Al Kharafi joined
and was appointed as Group Chief and was appointed Group Chief
the Group in 2001 and has been
Financial Officer from June 2022. Risk Officer in June 2024. He has
Chief Operating Officer - Head
He has been the Group Financial extensive experience in financial
of Operations and Information
Controller since 2012. Prior to services risk management and has
Technology for the Group since May
joining the Bank, Mr. Ronghe worked held the Chief Risk Officer position
2023. He serves also as a member
as a Senior Auditor at a Big4 over the last 15 years including
of various Management
accounting firm in Kuwait. He has Group Chief Risk Officer QNB in
Committees. Prior to that, he held
extensive experience in finance and Qatar; Group Chief Risk Officer
several leadership positions in
banking. Mr. Ronghe is a member Bank ABC Bahrain and Chief Risk
Operations and Consumer Banking
of the Institute of Chartered Officer Riyad Bank KSA. In Australia
Group. He served on the board of
Accountants of India and a graduate he was the Chief Risk Officer of
the Credit Information Network
of the Institute of Cost Accountants Bankwest and oversighted the Asia
Company (Ci- Net). He has extensive
of India. He also holds a Bachelor Pacific risk management areas of
experience in retail banking, Digital
of Commerce Degree from the Commonwealth Bank of Australia.
banking; Intelligent Automation,
University of Pune, India. Mr Lowen has served as a
Technology and operations. Mr.
director on the boards of banks
Mohammed Al Kharafi has a
in his capacity as a risk officer
Bachelor’s Degree in Business
including with QNB Egypt, Turkey,
Administration from the Arab Open
and Indonesia. He is a member
University. He has participated in
of the Chartered Accountants
a number of Executive Education
Australia & New Zealand and the
Programs at Harvard Business
Australian Institute of Company
School, Chicago Booth School
Directors. A Chartered Accountant
of Business, Stanford, Columbia
from New Zealand, Mr. Lowen has
Business School, Insead and
also served as Chairman of the
American University of Beirut.
Risk Management Association of
Australia and completed executive
education programs, including
Wharton RMA specialized risk
certification.

57
2 Governance

Executive Management (continued)

Mr. Emad Al-Ablani Mr. Ahmed Bourisly Mr. Pradeep Handa

(General Manager – Group (General Manager - Corporate (General Manager - Foreign Corporate,
Human Resources) Banking Group) Oil and Trade Finance Group)

Mr. Al-Ablani joined NBK in March Mr. Bourisly joined NBK in 1998 Mr. Handa joined NBK in 1980 and
2003 and was appointed as General and has been General Manager, has been General Manager - Foreign
Manager – Group Human Resources Domestic Corporate Banking at NBK Corporate, Oil and Trade Finance
in 2014. He is also a member of since June 2019. He served on the Group since 2012. He is also a
various Management Committees. Board of NBK Capital until January member of various Management
Former appointments at NBK 2015. He serves on the Committees. Former appointments
include Deputy General Manager, Board of Boubyan Takaful. He is also at NBK include Assistant General
Head of Human Resources – Kuwait a member of various Management Manager, Executive Manager and
and Assistant General Manager and Credit Committees. Mr. Bourisly Senior Manager at Corporate
– Recruitment & HR Operations. has extensive experience in all areas Banking Group - Kuwait. He has an
He has an extensive experience in of Credit and Corporate Banking extensive experience in handling
Human Resources. Mr. Al-Ablani Management. He holds a Bachelor’s Foreign Corporate Banking and Oil
holds an Executive Master’s degree Degree in Business Administration and Trade Finance matters.
in Business Administration (EMBA), with a concentration in Marketing Mr. Handa holds a Master’s Degree
from the American University of from University of the Pacific, CA. from the University of Delhi, India.
Beirut (Lebanon) and a Bachelor He attended numerous training
of Arts Degree in Educational courses and seminars at Harvard
Psychology from Kuwait University. University (USA) and INSEAD,
France.

NBK Annual Report 2024

 Mr. Jad Zakhour
(General Manager – Head of
Treasury Group)

Mr. Zakhour joined the Group in

2006 and has been Head of
Treasury Group since Jan 2020. He
was previously the Deputy Group
Treasurer since August 2014.
He is also a member of various
management committees. Mr.
Zakhour has extensive experience
in treasury, investment and
wealth management. Mr. Zakhour
holds a Bachelor’s Degree in Civil
Engineering from Homs University
and a Master’s Degree in Business
Administration in Finance from
American University of Beirut. He is
a Certified Financial Risk Manager
(FRM). Mr. Zakhour has participated
in a number of Executive Programs
at Harvard Business School and
INSEAD.

59
2 Governance

Corporate Governance
Framework

National Bank of Kuwait Group is aligned with the best • Developed and continually improved the Corporate Gover-
international Corporate Governance practices and risk nance reporting systems between entities of the Group.
management, to protect stakeholders’ rights. During 2024, the • Fulfilled the Capital Markets Authority requirements of the
Group adhered to all the provisions and determinants of CBK Corporate Governance regulations for NBK Capital and
instructions regarding the Corporate Governance rules and Watani Financial Brokerage Company.
standards for Kuwaiti banks, issued in September 2019, as well
as the regulatory instructions related to governance in Kuwait
and those issued by other countries in which the Group’s entities The Board and Committees’
operate. composition and duties
Represented by the effective supervisory role of the Board of NBK Group’s Board of Directors is composed of eleven (11)
Directors and the Executive Management, the Group focused on members (one (1) executive member, six (6) non-executive
improving the Corporate Governance and compliance culture members and four (4) independent members) representing the
across all of its entities, where the Corporate Governance shareholders. The Board members are elected and appointed by
Framework is constantly developed to establish sound and the General Assembly of the Bank, for three (3) years. The Board
effective corporate values. This is achieved through a set of aims to strengthen the long-term success of the Group and to
policies, procedures and standards adopted by the Group, which deliver sustainable value to shareholders.
are periodically updated to be in line with the best applicable and
relevant international practices. The Board’s structure is generally characterized by having the
appropriate number of members, diversity of professional
The Group recognizes the importance of applying the principles experience, educational qualifications and broad knowledge of
and standards of good governance; It follows professional and the banking and business sectors. Board members collectively
ethical standards in all kinds of deals, and ensures disclosure hold experience and knowledge in the areas of accounting,
and transparency of information that is accurate and timely. This finance, economics, strategic planning, corporate governance,
contributes to the development of the Group’s working efficiency internal control and risk management, in addition to outstanding
and enhances the confidence of shareholders, related parties and experience in the local and regional business environment.
stakeholders in the Group’s performance, as well as the banking The Group’s balanced and non-complex Board structure facilitates
sector in Kuwait. the process of exchange of information on an accurate and
During 2024, the Group achieved a number of key timely basis between different Group entities. This has been
accomplishments in the effective implementation of the accomplished by establishing direct communication channels
Corporate Governance Framework. These are as follows: across the Group, which promote the principle of disclosure and
transparency regarding Group operations. Moreover, the structure
• Reviewed and updated the governance policies and charters maintains the supervisory role assigned to the Board, and
according to the regulatory instructions in Kuwait and the effectively contributes to fulfilling the Board’s responsibilities.
instructions issued by the regulatory authorities in countries To comply with the supervisory regulations issued by CBK,
where the Group operates. in addition to the Group’s effort to effectively implement the
• Developed and implemented best practices in Governance Corporate Governance Framework, the Group formed an
compliance, regulatory risks, Foreign Account Tax Com- appropriate number of Committees that are aligned with the size
pliance Act (FATCA), Anti Money Laundering / Combating of the Group, the nature and complexity of its activities, and the
Financing of Terrorism, Anti-financial crimes, Information geographical distribution of the Group’s entities. The Board of
Technology and Cybersecurity Risks. Directors formed five sub-committees to enhance the Board’s
• Conducted an independent review and assessed the efficien- effectiveness in overseeing important Group operations.
cy of implementing Corporate Governance at NBK subsid-
iaries, by monitoring and supporting the governance units at
these subsidiaries, which manage the affairs of the Board of
Directors and their Committees.

NBK Annual Report 2024

The Corporate Governance Framework of the Group is illustrated as follows:

Shareholders
Shareholders are exercising their powers through their participation in the General
Assembly meeting, which is the highest decision-making authority in the Bank

Board of Directors
Board
The Board of Directors has the authority and power to manage the affairs Secretary
of the National Bank of Kuwait and to protect shareholders’ interests

Board Risk and Board Nomination Board Corporate

Board Audit Board Credit
Compliance and Remuneration Governance
Committee Committee
Committee Committee Committee

External Group Internal Group Risk Group Compliance Corporate

Auditors Audit Management and Governance Governance Office

Executive Management
(Vice-Chairman and Group Chief Executive Officer)
Direct oversight to manage the business and daily affairs of the
Bank in line with the strategic frameworks established by the
Board of Directors

Other Business Management

Sectors Committees

61
2 Governance

Group’s Board of directors Sub-Committee

Corporate Governance Nomination and Risk and Compliance Audit Committee Credit
Committee Remuneration Committee Committee
Committee

1. Mr. Hamad Mohamed 1. Mr. Abdulwahab 1. Dr. Robert Maroun 1. Mr. Farouq Ali 1. Mr. Hamad Mohamed
Al-Bahar (Board and Ahmad H. Al-Bader Eid (Independent Akbar A. Bastiki Al-Bahar (Board and
Committee Chairman (Independent Board member and (Independent Committee Chairman)
2. Mr. Yacoub Yousef Board member and Committee Chairman Board member 2. Mr. Yacoub Yousef Al-
Al-Fulaij Committee chairman) 2. Mr. Muthana and Committee Fulaij
3. Mr. Muthana 2. Mr. Muthana Mohamed Al-Hamad Chairman) 3. Mr. Emad Mohamed Al
Mohamed Al-Hamad Mohamed Al-Hamad 3. Mr. Haitham Sulaiman 2. Mr. Muthana Bahar
4. Mrs. Huda 3. Mr. Haitham Sulaiman Al-Khaled Mohamed Al-Hamad 4. Mr. Isam Jasem A.
Mohammad S. Al- Al-Khaled 4. Mrs. Huda 3. Mr. Haitham Sulaiman Al-Sager (Board
Rifai 4. Mr. Emad Mohamed Mohammad S. Al-Rifai Al-Khaled Vice - Chairman and
5. Mr. Abdulwahab Al Bahar 5. Mr. Farouq Ali Akbar 4. Dr. Robert Maroun Eid Group Chief Executive
Ahmad H. Al-Bader A. Bastiki 5. Dr. Nasser Amin Saidi Officer)

Committee’s mission: Committee’s mission: Committee’s mission: Committee’s mission: Committee’s mission:

Assist the Board Assist the Board Assists the Board Assists the Board in Responsible for
in overseeing the in carrying out the in carrying out its a supervisory role reviewing the quality
implementation of Nomination and responsibilities with regarding the efficiency and performance of the
the Group’s Corporate Remuneration respect to the Group’s and independence of Group’s credit portfolio.
Governance. The responsibilities risk management and the internal and external The Board has authorized
Committee is also pertaining to the Group Compliance & audit operations for the the Committee to
responsible for Board of Directors and Governance functions Group. Also oversees approve credit facilities
monitoring the Executive Management. by evaluating and the preparation of that exceed the
implementation The Committee also monitoring the risk the periodic financial authorization granted
progress of the policies supports the Board in governance framework, statements and other to Senior Management,
and procedures reviewing and enhancing risk appetite, risk regulatory reports. in accordance with the
pertaining to Board structure and strategy and capital Credit Policy and the
governance. development of the planning. In addition to approved authority
caliber of the Board its role of overseeing the matrix of the Group
Members. It also adequacy of regulatory in accordance with
assists the Board in compliance and the related regulatory
setting up the Group’s enhancing compliance instruction.
remuneration framework culture across the
and ensures effective Group.
implementation in
accordance with Group
remuneration policy.

NBK Annual Report 2024

Board of Directors and
Committee Meetings

The Board of Directors held nine(9) meetings during 2024. The below table shows names of the Board of Directors, their
Minutes of all meetings have been documented and are included memberships in Board Sub-Committees and number of meetings
in the Bank’s records. that reached fourty nine (49) meetings, in addition to the number
of meetings attended by each member during the year.

Board of Directors Committee Membership Board of Corporate Nomination & Risk & Audit Credit
Directors Governance Remuneration Compliance
Members
Mr. Hamad Mohammed • Chairman of Board of Directors 7 2 11
Al-Bahar • Chairman of Corporate Governance Committee
(Non-Executive member) • Chairman of Credit Committee
Mr. Isam Jasem A. • Vice-Chairman and Group Chief Executive Officer 9 19
Al-Sager • Member of Credit Committee
(Executive member)
Mr. Yacoub Yousef • Member of Corporate Governance Committee 7 2 10
Al-Fulaij • Member of Credit Committee
(Non-Executive member)
Mr. Muthana Mohamed • Member of Corporate Governance Committee 9 2 4 5 9
Al-Hamad • Member of Nomination and Remuneration Committee
(Non-Executive member) • Member of Audit Committee
• Member of Risk and Compliance Committee
Mr. Haitham Sulaiman • Member of Risk and Compliance Committee 9 4 5 9
Al-Khaled • Member of Audit Committee
(Non-Executive member) • Member of Nomination and Remuneration Committee
Mr. Emad Mohamed Al • Member of Nomination and Remuneration Committee 9 4 19
Bahar • Member of Credit Committee
(Non-Executive member)
Mrs. Huda Mohammad • Member of Risk and Compliance Committee 8 2 5
S. Al-Rifai • Member of Corporate Governance Committee
(Non-Executive member)
Dr. Robert Maroun Eid • Chairman of Risk & Compliance Committee 9 5 9
(Independent member) • Member of Audit Committee
Dr. Nasser Amin Saidi • Member of Audit Committee 9 9
(Independent member)
Mr. Abdulwahab Ahmad • Chairman of Nomination and Remuneration Committee 9 2 4
H. Al-Bader • Member of Corporate Governance Committee
(Independent member)
Mr. Farouq Ali Akbar A. • Chairman of Audit Committee 9 5 9
Bastaki • Member of Risk and Compliance Committee
(Independent member)
Total number of meetings 9 2 4 5 9 20

Meetings held by the Board of Directors and its Committees during 2024 were in compliance with Central Bank of Kuwait governance
rules and standards, and the Board and Committees’ charters in terms of the number of meetings, periodicity, the quorum, and the
topics reviewed and discussed by members.

63
2 Governance

Effective Implementation of the

Corporate Governance Framework

General overview: a culture of corporate values among the Bank’s entire staff.
This is achieved through constant efforts to achieve the Bank’s
strategic objectives, improving Key Performance Indicators, and
The Group Board of Directors permanently and continuously
compliance with laws and regulations, especially the rules of
strives to achieve the best interest of the Bank’s shareholders
Corporate Governance. In addition, the Board adopts a set of
through effective oversight and monitoring of the work of the
policies, charters, systems, mechanisms, reports and procedures
Executive Management, ensuring the implementation of the
which the Group has effectively and integrally applied, relying on
Bank’s strategy and objectives, and confirming that performance
the philosophy of the Group in the implementation of Corporate
is in accordance with the Bank’s plans. During the year, the Board
Governance as a culture and working principle, and not only as
of Directors reviewed and developed the Group’s strategy and risk
supervisory instructions and legislative regulations.
appetite, including all future plans of subsidiaries and overseas
The followings are the most important achievements of the Board
branches. The Board of Directors gives particular importance to
of Directors and its Committees during 2024:
the implementation of governance at Group level, by creating

Board of Directors’ Key Achievements

The Board of Directors met nine (9) times during the year and the followings key duties were accomplished:
• Approved the Budget for the year 2024, the Interim Financial Information, the audited balance sheet, profit & loss account of the
Bank and dividends for the financial year ended on 31/12/2023.
• Discussed the risk appetite and its impact on the Group›s strategy.
• Reviewed the results of the Internal Capital Adequacy Assessment Process (“ICAAP”), financial stress testing as per the regulatory
requirement of Basel (3).
• Discussed and approved general and specific provisions for the local and international loan portfolio.
• Approved the update of financial authority matrix for the GCEO, the DGCEO, the CEO-Kuwait , his Deputy and Head of wealth
management..
• Reviewed the Board of Directors’ structures within subsidiaries, on an ongoing basis, ensuring their compliance with the regulatory
requirements and the general policy of the Group’s governance framework.
• Followed the progress of the Group’s operations, through regular meetings with Executive Management and discussed the results
of the Group’s business through periodic reports prepared by the Financial Group, which clarifies the most important financial
indicators of the Bank›s budget and profits according to geographical distribution of branches and foreign subsidiaries.
• Reviewed and evaluated the effectiveness of the Board and its Committees, in addition to conducting individual self-assessments
of the Board and Committee members.
• Reviewed the remuneration framework, the mechanism of linking rewards to performance the level of risk exposure and updated
the remuneration policy at Group level.
• Oversaw the implementation of the Corporate Governance Framework at Group level and ensured compliance with local regulations
in the countries the Group operates in, which are in line with the Group’s Corporate Governance Framework.
• Reviewed, developed and approved the policies related to Corporate Governance and charters of the Board of Directors and its
committees at the Group level in order to be commensurate with regulations issued from Supervisory Authorities, the Group’s
organizational structure, and to keep up with applicable international and leading Corporate Governance practices.
• Conducted self-assessment on Corporate Governance implementation at Group level and identified the areas that need to be
developed.

NBK Annual Report 2024

• Reviewed the results of the annual independent evaluation of the Corporate Governance Framework conducted by Group Internal
Audit, which highlighted the areas of the Framework that require improvement.
• Reviewed the results of the annual independent evaluation of the Internal Control Review for the Corporate Governance Framework,
conducted by the external auditors

• Supervised the Corporate Governance offices and units in the Bank’s subsidiaries, followed up their progress through periodic
reports presented to the Board Corporate Governance Committee for review and discussion, and subsequently to the Board of
Directors.
• Approved Bank’s representatives in Subsidiaries, Associate Companies, External Committees and others
• Reviewed the results of bank’s compliance level with Capital Markets Authority instructions concerning the adequacy of information
technology systems related to Custodian activity that was and conducted by independent external auditor.
• Reviewed the updated regulations, legislations and provisions related to Bank’s activities issued by Central Bank of Kuwait, Capital
Markets Authority and other regulatory authorities in the countries in which Bank’s subsidiaries and branches operates.
• Approved cash dividend distribution of 25% (twenty five per cent) of the nominal value of the share (twenty five fils per share)
• Approved the increase of NBK issued and paid up capital by 5% (five per cent) as bonus shares.
• Approved semi-Annual Cash dividends distributions at the rate of 10% of the nominal value of the share.
• Periodically reviewed and updated Bank’s organizational structure.
• Approved the updated training plan for the year 2025 for the Board members, which covered special topics regarding Risk
Management and Audit.
• Reviewed the agenda of Bank’s General Assembly meeting, which convened on 23/3/2024.
• Approved opening the nomination for Board of Directors membership.
• Approved the issuance of USD-denominated Green senior unsecured notes through Bank’s Global Medium Term Note programme.

Board Committees’ Key Achievements

Corporate Governance Committee

The Committee met twice during the year and the following key duties were performed:

• Reviewed the implementation of Corporate Governance of NBK Group and its subsidiaries and overseas branches, while providing
continuous support to subsidiaries.
• Reviewed the Board and its sub-Committee’s charters according to supervisory regulations issued in this regard and made
recommendations to the Board of Directors.
• Reviewed and discussed the results of the internal audit report on the annual evaluation of the Corporate Governance Framework,
and the level of compliance with regulators.
• Reviewed and discussed the report and the results of the evaluation of internal control systems, and the adequacy of
implementing the rules of corporate governance at Group level.
• Reviewed and updated Corporate Governance policies, in line with regulatory instructions, leading practices, and made
recommendations to the Board for approval.
• Reviewed the related parties’ transactions report, the conflict of interest report, the whistleblowing cases, and discussed the
effectiveness of the existing mechanisms.
• Supervised the progress of Corporate Governance implementation at Group level.
• Reviewed and discussed the annual compliance report on the adequacy of the Corporate Governance implementation at Group
level.
• Reviewed the disclosures related to Corporate Governance, which are presented in the Group annual report.
• Reviewed the new instructions issued by the regulatory authorities in the countries where our subsidiaries are located and the
procedures taken to comply with these instructions.
• Reviewed Semi-annual Assessment of the risks associated with the group’s structure.

65
2 Governance

Nomination and Remuneration Committee

The Committee met four (4) times during the year and the following key duties were performed:
• Supervised the process of the annual assessment of the Board of Directors’ performance for the Board, its committees, and the
self-assessment of each member of the Board of Directors for the year 2023.
• Reviewed the updated training plan for the year 2025 for the Board members, which covered Risk Management and Audit
topicsand made recommendations to the Board of Directors.
• Reviewed the Internal Audit report on Corporate Governance and the independent evaluation conducted on the Bank’s
Remuneration framework.
• Reviewed the remuneration policy and presented it for approval to the Board of Directors.
• Reviewed and approved the rewards and incentives for 2024 based on the key performance indicators and key risk indicators, and
discussed claw back cases for 2024 and made recommendations to the Board.
• Reviewed the links between remuneration and the Group’s long-term objectives.
• Reviewed and discussed the succession plan prepared by Group Human Resources and recommended it to the Board for approval.
• Reviewed and discussed the phantom shares plan for key personnel, and made recommendations to the Board of Directors.
• Reviewed and discussed the latest developments in the banking industry, the related reports in this regard, and the latest related
regulatory requirements.
• Reviewed the disclosures related to Remunerations presented in the Group annual report of 2024.
• Reviewed the committee’s charter and made recommendations to Board of Directors.
• Reviewed nominations regarding the selection of Board members for Board for upcoming term and made recommendations to the
Board of Directors.
• Reviewed last updates regarding BOD membership in Bank’s subsidiaries
• Assured the independency of Group Risk Management, Group Compliance & Governance and Group Internal Audit.

Audit Committee
The Committee met nine (9) times during the year and the following key duties were performed:
• Reviewed and approved the Group’s internal audit annual plan for 2024 based on the risk assessment and audit priorities. Also
reviewed the updated internal audit policy and procedures and presented them to the Board for approval.
• Co-ordinated with external auditors and reviewed the interim and annual financial statements of the Group, and dividends
distribution and submitted recommendations to the Board of Directors.
• Reviewed and discussed the periodical Internal Audit reports and the attached reports.
• Reviewed and discussed Group internal audit summary and considered what has been achieved in the internal audit plan, in
comparison to performance during the previous year
• Reviewed and approved the scope of the external auditor‘s plan related to Internal Control Review and discussed the results of
the report.
• Reviewed the Committee charter and submitted recommendations to the Board of Directors.
• Reviewed the efficiency and independence of the internal audit function, infrastructure and the overall annual assessment of the
function’s performance with the Group Chief Internal Auditor.
• Discussed internal control aspects related to information technology systems and information security.
• Provided recommendations related to the external auditors’ fees, with respect to the services provided.
• Discussed external audit results related to Group internal audit.
• Reviewed and discussed the internal audit reports for Kuwait, overseas branches and subsidiaries.
• Approved Key performance indicators for Group Chief Internal Auditor

NBK Annual Report 2024

Risk and Compliance Committee

The Committee met five (5) times during the year and following key duties were performed:
• Reviewed and discussed the strategy and challenges of Risk Management, the set of periodic risk management reports at Group
level and the key risk indicators
• Reviewed a report on the most important activities and achievements of the Group Risk Management of 2024 and the planned
work in 2025.
• Reviewed and discussed the periodic market risk report, Internal Capital Adequacy Assessment Process (“ICAAP”), liquidity
ratios, the stress testing scenarios and the methods with which they dealt at Group level.
• Reviewed and discussed the risk limit ratios, compared the ratios to the Group’s approved risk appetite and the exposure levels
of countries in which the Group operates, and discussed those ratios and the changes compared to previous periods and credit
concentrations for companies , countries and sectors.
• Reviewed updates on overall economic situations and their impact at the Group level
• Reviewed the reports of operational risk, market risk and compliance risk and compliance plan at Group level.
• Reviewed updates regarding AML awareness training to NBK staff.
• Reviewed periodic reports on the information security governance, information systems risks, the results of the internal control
systems report on regulatory compliance, anti-fraud , anti-money laundering and financing of terrorism, anti-Financial Crime and
compliance with regulatory requirements of the Foreign Account Tax Compliance Act -FATCA, at Group level.
• Reviewed and approved Anti-Financial Crime (AFC) Policies and Procedures, AML/CFT Policy, AML Risk Assessment and Anti-
Fraud Policy & Procedures, and presented them to the Board for approval.
• Reviewed regulatory compliance remarks at Group and subsidiaries level, through self-evaluation results as well as field visits and
review processes.
• Evaluated the Group Chief Risk Officer and Group Chief Compliance & Governance Officer annual performance and determined
their remunerations.
• Reviewed and approved the amended Organizational Structures of Group Risk Management and Group Compliance & Governance
and made recommendation to Board for approval.
• Reviewed Compliance Plan for the year 2024 for NBK-Kuwait,
• Reviewed Board Risk & Compliance Committee Charter to be presented to the Board for approval.
• Reviewed Group Cybersecurity progress report and its Key Performance Indicators (KPI) for NBK Kuwait and its overseas Branches
and subsidiaries, Bank’s procedures regarding Cybersecurity Risk of Virtual Private Networks (VPN).
• Reviewed a report on the most important activities and achievements of the Group Compliance and Governance for 2024 and the
planned work in 2025.
• Approved the appointment of Group Chief Risk Officer and submitted its recommendation to the Board of Director for final
approval.
• Reviewed Group Compliance & Governance reports regarding regulatory parties’ instructions, local and international regulatory
compliance, importance correspondences with Central bank of Kuwait, disclosures to Capital Markets Authority and Boursa
Kuwait Company and updates regarding compliance and governance for local and overseas subsidiaries and overseas branches.
• Reviewed and approved policies and procedures of Group Risk Management and Group Compliance and Governance and
submitted recommendations to the Board for approval.

Credit Committee
The Committee met twenty ( 20) times during the year and the following key duties were performed:
• Reviewed and approved credit proposals within the authority matrix delegated by the Board of Directors.
• Coordinated with the Board Risk Committee to discuss credit risk limits.

67
2 Governance

Board of Directors Self- Board Committees through the self-assessment methodology,

which has been designed and developed to evaluate the
Assessment Framework effectiveness of each Board member, and determine the
aspects of development required, and the necessary training for
Annually and under the supervision of the Board of Directors, members.
Board Nomination and Remuneration Committee evaluates the
effectiveness of Board members and their participation, whether The following table illustrates the criteria on which the evaluation
individually or collectively. This includes an assessment of the is based and that are included in the self-evaluation forms:

Composition
and
qualifications

Attendance
and
participation Adequacy and
Effectiveness
of Meetings,
minutes and
resolutions
Means of
communication
and reporting
mechanism
Oversight
role of the
Board and
Committees

Based on the evaluation results, the Committee presented its

report to the Board that reviewed and approved.

NBK Annual Report 2024

Remuneration Policy
and Framework
NBK’s remuneration policy is in line with the strategic objectives The Group remuneration deferment policy ensures an appropriate
of the Group, and in particular is designed to attract, retain and portion of the variable remuneration of senior employees
motivate high-caliber, professional, skilled and knowledgeable (including those deemed to have a material impact on the risk
employees, at the same time as promoting sound and sustained profile of the organization) is deferred. The deferment of variable
profitability and effective risk management. remuneration applies to the Deferred Cash Bonus and Phantom
Shares Plan.
The Group’s financial remuneration framework has been linked
with its long-term and short-term performance objectives. The Group applies a deferment approach of up to three years and
The Board-approved Group strategy is transformed into Key final vesting of these variable components is subject to continuing
Performance Indicators (KPIs) and remuneration is determined employment and the absence of risk materialization. Claw-back
based on the achievement of these KPIs towards the overall applies on the non-vested portions in case risk materializes. The
Group strategy; these include financial and non-financial criteria claw-back mechanism is applicable on the Deferred Cash Bonus
and (where appropriate) Key Risk Indicators (KRIs). and Phantom Shares Plan.

For the purpose of granting remuneration, the Group has The Group’s remuneration process is governed by the Board
differentiated its staff categories, between “material risk-takers,” Nomination and Remuneration Committee with the ultimate
and Financial and Risk Control functions. decisions and responsibilities falling to the Board of Directors.

Remuneration for material risk-takers has been linked with Remuneration disclosures
the risk limits, which were cascaded as per the approved risk Board of Directors’ members (Executive member, Non-Executive
appetite. The Key Performance Indicators for the Financial and members and Independent members) receive remuneration
Risk Control functions are based on the objectives of the control amounting to KD 70 thousand each (total KD 770 thousand) for
function itself. Any claw-back to be applied is based on the their services in Bank’s Board membership. Board of Director’s
performance standard of the function. remuneration is subject to approval of shareholders at the Annual
General meeting.
The Group operates a “total reward” philosophy, considering all
components of financial remuneration. The key components are: The five senior Executives who received the highest remuneration
packages in addition to the Group Chief Financial Officer (GCFO,
• Fixed remuneration (salaries, benefits, etc.) Group Chief Internal Auditor (GCIA) and Group Chief Risk Officer
• Variable remuneration (performance-based remuneration) (GCRO) received a compensation aggregating KD 12,019 thousand
which includes cash bonus and equity shares (as per Phantom for the year ended December 2024
Shares Plan)
The following table details the remuneration paid (KD) to staff
The Group ensures there is a suitable balance between fixed categories:
and variable remuneration to allow for the possibility of reducing
remuneration in the case of adverse financial performance.

Variable Remuneration KD ’000

Number of Fixed Phantom Other Performance

Employee Categories Employees Remuneration Cash Shares Plan Deferred Incentives Total

Senior Management 47 7,423 13,290 2,149 - 354 23,216

Material Risk Takers 45 6,634 12,199 1,841 - 866 21,540

Financial and Risk

20 1,792 1,201 524 9 - 3,526
Control

For disclosure purposes

• Senior Management: includes all staff above and equivalent to deputy, and the heads of business functions and their
the position of Deputy General Manager for all business units, deputies
excluding Financial and Risk Control functions • Financial & Risk Control Functions: includes heads of Control
• Material Risk-Takers: includes Group Chief Executive Officer functions (Financial Control, Risk Management, Compliance
and his deputy, Chief Executive Officer (Kuwait) and his and Governance, Internal Audit and Anti-Money Laundering
and Combating Financing Terrorism Unit), and their deputies.

69
2 Governance

Internal Control Adequacy

Report

Board statement on adequacy of Review of the internal control

internal control systems systems by an independent third
The Board strives consistently to ensure the adequacy and party
efficiency of the control systems required to protect the Group’s
operations, whilst ensuring compliance with such internal An Internal Control Review (ICR) of NBK is conducted annually by
controls and establishing that those controls provide the an external audit firm in accordance with CBK requirements. The
necessary protection for the Group against risks from within or ICR examines accounting and other records, and evaluates the
outside the Group. The Board ensures an effective internal control internal control systems with regard, but not limited, to Corporate
systems and Risk Management and Compliance functions are Governance, Financial Control, Consumer Banking, Corporate
in place with sufficient authority, independence, resources and and Private Banking, International Banking Group, Treasury,
access to the business lines. The Board regards the Internal Audit Regulatory Compliance, Operations and Information Technology,
function and external audit activities as integral parts of key Risk Management, Human Resources, Administration, Internal
control tools for independent review of information reported by Audit, Anti-Money Laundering and Counter terrorism Financing,
Executive Management to the Board. Legal Affairs Engineering, impairment Compliance and Regulatory
Reporting.
The Board Audit Committee is responsible for the oversight of
the Group’s internal control framework along with the selection A summary of the ICR report for the year ended 31 December
and rotation of external auditors in compliance with regulatory 2023 was presented to the Board of Directors during 2024. The
requirements. report did not highlight any significant issues.

The Board has been provided with the results of assessments on

the existing internal control systems from Risk Management and
Compliance, Internal Audit and an independent external party.
The Board believes that the existing internal control systems
adopted and used at NBK Group are satisfactory and adequate.

NBK Annual Report 2024

Internal Control Review Private and confidential
The Board of Directors
National Bank of Kuwait S.A.K.

by External Party State of Kuwait

24 June 2024

subject to evaluation of internal controls and annual supervision

Report on Accounting and Other by the respective local regulators. A summary of the respective
Records and Internal Control Systems internal control reports is provided in Appendix IV of this report.

In accordance with our letter of engagement dated 1 February 2024, As Board of Directors of National Bank of Kuwait SAKP, you
we have examined the accounting and other records and internal are responsible for establishing and maintaining adequate
control systems of National Bank of Kuwait S.A.K.P (“the Bank” or accounting and other records and internal control systems, taking
“NBK”), its branches in Kingdom of Bahrain, Kingdom of Saudi Arabia into consideration the expected benefits and relative costs of
and United Arab Emirates (“UAE”) and its subsidiaries National Bank establishing such systems. The objective is to provide reasonable,
of Kuwait (Lebanon) SAL., National Bank of Kuwait France SA, and but not absolute, assurance that assets are safeguarded against
National Bank of Kuwait (International) PLC (together referred to loss from unauthorized use or disposition, that banking risks are
as “the Group”), which were in existence during the year ended 31 properly monitored and evaluated, that transactions are executed
December 2023. We covered the following areas of the Group in accordance with established authorization procedures and are
recorded properly, and to enable you to conduct the business in a
prudent manner.
• Corporate Governance; • Legal;
• Risk Management; • Complaint and Customer
Because of inherent limitations in any accounting and internal
• Anti-Money Laundering protection Unit;
control system, errors or irregularities may nevertheless occur
• Consumer Banking • Financial Securities (limited
and not be detected. Also, projection of any evaluation of the
• Corporate and Private to Kuwait only);
systems to future periods is subject to the risk that management
Banking • InvestorRelations
information and control procedures may become inadequate
• Treasury; and Corporate
because of changes in conditions or that the degree of compliance
• Group Investment Communications;
with those procedures may deteriorate.
• Human Resources; • Confidentiality of Customer
• Central Processing and Information;
In our opinion, having regard to the nature and size of the group’s
Fund Transfer; • Anti-Fraud, Bribery and
operations, during the year ended 31 December 2023, the
• Financial Control; Corruption;
accounting and other records and internal controls systems,
• Regulatory Compliance; • Engineering
in the areas examined by us, were established and maintained
• Administration; • International Banking; and
satisfactorily in accordance with the requirements of the Manual of
• Internal Audit; • Impairment Compliance
General Directives concerning Internal Control Reviews issued by
• Operations & Information and Regulatory Reporting.
the Central Bank of Kuwait on 14 November 1996, CBK instructions
Technology;
dated 10 September 2019 concerning Corporate Governance
Rules and Systems at Kuwaiti Banks and and the CBK instructions
Our examination has been carried out with regard to the dated 16 February 2023 concerning Combating Money Laudering
requirements contained in the manual of general directives Operations and Financing of Terrorism, and CBK instruction dated
concerning Internal Control reviews issued by the Central Bank of 9 February 2012 on maintenance of confidential information and
Kuwait (‘the CBK”) on 14 November 1996, CBK instructions dated data related to the customer information with the exception of the
10 September 2019 concerning Corporate Governance rules and matters set out in the report.
systems at Kuwaiti Banks, CBK instructions dated 16 February
2023 concerning Combating Money Laundering Operations an Furthermore, the Bank has established a process of regular follow-
Financing of Terrorism, CBK instruction dated 9 February 2012 up on reported exceptions to ensure that corrective actions are
on maintenance of confidential information and data related to being taken to rectify the control weaknesses and gaps identified
customer information and international standards on assurance during the course of the Internal Control Review.
engagement 3000.

The New York, Singapore and Shanghai branches of National Bank

R. Rasheed M. Al-QenaeLicense No. 130
of Kuwait SAKP, NBK Banque Privée (Suisse) S.A., National Bank
Of KPMG Al-Qenae & PartnersMember firm of
of Kuwait-Egypt S.A.E (“NBK-Egypt”), Watani Investment Company
KPMG International
K.S.C.C. and Watani Financial Brokerage Company K.S.C.C are

71
2 Governance

Ethics and Professional

Conduct

Values and ethics through applying a conflict of interest policy. The Group, under
NBK Group continues to apply Corporate Governance values the supervision of the Board, has reviewed the Related Parties
as fundamental principles and an integral part of the culture of Transactions Policy, which is compatible with the nature of the
the Group. During the year, the Group worked on a number of Group’s business regulatory updates in the markets in which it
initiatives that will strengthen the commitment to the values of operates. In addition, it has adopted a set of organized procedural
Corporate Governance and raise the level of awareness of those models for cases of disclosure of potential conflicts of interest
values at all levels of the Group and related bodies. and a mechanism to deal with them.

NBK Group is committed to achieving the highest levels of Potential cases of conflicts of interests and related parties
governance and has established those values within a number of transactions are subject to independent review by Group Internal
pillars, which emerged through a set of policies and procedures Audit.
set forth as follows:
Confidentiality
Ethics code The Board, Executive Management and employees ensure that the
The ethics code is considered one of the most important Group maintains the confidentiality of information relating to its
components of the Corporate Governance framework and stakeholders, in accordance with the rules and regulations issued
is promoted through the code of conduct, which is adopted by the Central Bank of Kuwait and other regulatory bodies.
by the Board of Directors and Executive Management in daily
interactions with employees, customers and all of the Group’s During 2024, the Group continued to apply measures to maintain
stakeholders. the confidentiality of information in accordance with policies
and procedures and internal control systems, which require the
This code is subject to periodic review, to keep it up to date with preservation of confidentiality.
all the latest developments and enhancements in the areas
of governance and control of professional conduct. The Board Whistleblowing policy
of Directors also oversees the efficient implementation of the The Group has adopted a whistleblowing policy that encourages
charter through the audit and internal control functions, to openness and trust among its employees. This helps employees
identify and remedy any gaps. report any complaint, whether relating to bad behavior or illegal
or unprofessional actions. The complaint is directly made to the
Conflict of interest Chairman of the Board and the information received remains
The Group ensures that in all stages of banking procedures for confidential and, if necessary, saved anonymously, to provide
its customers, it treats all customers fairly, equally and honestly, protection to the employee. This mechanism is subject to review
to achieve the maximum level of transparency and objectivity, by Group Internal Audit.

NBK Annual Report 2024

Stakeholder’s Rights

The Group has continued to implement a well-defined process in who can optimally serve customers. In addition, the Group
managing transparency, communication and open dialogue with continuously ensures that it follows regulatory instructions and
its stakeholders. These measures include the protocols, which is a pioneer in international practices in customer service and
will be followed in communicating with stakeholders and the protection. NBK has taken the necessary steps to implement
degree of information which can be disclosed. the terms of the consumer protection instructions recently
issued by the Central Bank of Kuwait, by reviewing and updating
a policy approved by the Board to enhance the understanding of
Shareholders transparency and disclosure in banking transactions provided by
the Bank.
NBK Group promotes and maintains an open and transparent
channel of communication with its shareholders, which enables
them to understand Group business, its financial condition, Employees
and operating performance and trends. The Group has also
developed a section on its website that provides detailed reports The Group protects and abides by the rights provided to
to shareholders on Corporate Governance and other important employees, which include, but are not limited to, the following:
information relating to the disclosure of financial and non-
financial information. • Transparent remuneration and compensation structure
• A transparent working environment
The Public Institution for Social Security owns 6.17% of NBK • Contributing to employee talent-management schemes
Capital as of 31st December 2024. • Access to the whistleblowing policy

Investor Relations Community (Corporate Social

NBK Group promotes open and transparent dialogue with both its Responsibility)
institutional and private investors. The Investor Relations function
serves as the primary contact with shareholders, investors and The Group has maintained its progress in projects relating to
financial analysts. The Group also publishes information for Corporate Social Responsibility, to foster a sustainable economic
investors and stakeholders on a regular basis, through its website and social environment in the community, and regards this
as well as other media. as a priority for the Group. The Group discloses its relevant
social activities on its website and in the form of a separate
“Sustainability Report 2024”, published as an independent
Customers report.

The Group has ensured, since inception that it has established

professional and behavioral rules, and provides qualified staff

73
2 Governance

Group Risk Management and Group

Compliance and Governance

Group risk Management and Group Compliance and Governance ensure that risk-taking authority and policies are effectively
are a key component of banks’ second line of defense, for communicated from the Board to the relevant business units. The
monitoring and reporting risks-related practices and managing Group’s risk management, compliance management and internal
compliance risks. They function with direct reporting to Board audit functions assist executive management in controlling and
Risk and Compliance Committee, that responsible for identifying actively managing the Group’s overall risk profile.
and assessing key risks, measuring the levels of Bank’s risk
exposure, monitoring exposure levels in light of the risk appetite, The key features of the Group’s comprehensive risk management
non-compliance risk with applicable laws and regulations, policy are:
determining capital requirements on a regular basis following up
and evaluating decisions relating to certain risks. • The Board provides overall risk management direction and
oversight;
• The Group’s risk appetite is reviewed by the BRCC and
Group Risk Management ultimately approved by the Board;
• Risk management focused on compliance with applicable
NBK Group’s risk management framework is integral to its laws, regulations and internal policies is intrinsically
operations and culture and it seeks to manage risk in a embedded in the Group’s process and is a core competency
structured, systematic manner through a global risk policy, which of all its employees;
embeds comprehensive risk management into the organizational • The Group manages its credit, market, liquidity and
structure, risk measurement and monitoring processes. operational risks in a coordinated manner within the
Ultimate responsibility for setting out risk appetite and effective organization; and
management of risk rests with the Board. This is managed through • The Group internal audit provides independent validation
the Board Risk and Compliance Committee (the “BRCC”) and of the adequacy and effectiveness of the risk management
the Group Executive Committee (the “EC”). These committees framework on a Group level.

Group Risk Management structure

The structure of the Risk Management function consists of the following departments:

Group Risk Management

Operational Risk,
Credit Risk Market Risk Insurance and Enterprise Risk Technology Risk, and
Management Management Risk Financing Managment Business Continuity
Management

NBK Annual Report 2024

The Group Risk Management, which headed by the Group Chief Group Compliance and Governance
Risk Officer (“GCRO”), reports directly to the BRCC and is respon-
sible for: The Group Compliance and Governance is a part of NBK Group’s
culture of complying and operating in accordance to regulatory
• identifying and assessing the key risks faced by the Group; and legislative frameworks, where Group Compliance and
• measuring the Group’s exposure to those risks; Governance attempts to enhance sound practices and ensure
• monitoring this exposure in light of the Group’s risk appetite, that Bank does not violate any requirements set by legislators and
as approved by the Board; regulatory Bodies in either Kuwait or other countries where Group
• determining the Group’s corresponding capital needs on an operates.
ongoing basis;
• monitoring and assessing major decisions related to risk- The Compliance and Governance function is a key component
taking; and of the Bank’s second line of defense for managing compliance
• Following up and evaluating decisions related to certain risks. risks, the Group supervises and participates in placing internal
procedures in conformity with regulations. Its main role is
The risk management function assists senior management in con- to support the Bank and its Management in managing the
trolling and actively managing the Group’s overall risks and risk compliance risks, embedding and improving the compliance
profile. The function also ensures that: arrangements in all levels and structures of the Bank, in order
to ensure that the bank operates with integrity and adheres to
• The Group’s overall business strategy is consistent with applicable laws, regulations and internal policies.
the risk appetite approved by the Board of Directors and
allocated by the EC; The key features of the Group’s comprehensive policy of
• Risk policies, procedures and methodologies are consistent managing compliance risks and embedding sound governance
with the Group’s risk appetite; principles are:
• Appropriate risk management architecture and systems are
developed and implemented; and • The Board provides overall guidance to implement
• Risks and limits of the portfolio are monitored throughout the compliance culture and sound corporate governance
Group, including at appropriate “regional” levels. principles across the bank;
• The Group’s compliance and governance policies and
NBK Group and Group Risk Management regularly assess the ad- procedures are reviewed by the Board Risk and Compliance
equacy and effectiveness of the risk management framework in Committee and ultimately approved by the Board;
light of the changing risk environment. • Comprehensive reports concerning level of compliance and
associated risks are presented to Board and Board Risk and
Compliance committee;
• The Group coordinated and work with Bank’s Management
under the supervision of Board of directors.; and
• The Group internal audit provides independent validation of
the adequacy and effectiveness of the Group Compliance
and Governance framework on a Group-wide basis.

75
2 Governance

Group Compliance and Governance Structure

The structure of the Group Compliance & Governance consists of the following departments:

Group Compliance
and Governance

Anti-Financial Crime and Corporate Governance Model Validation and

and Capital Markets Information
Tax Compliance Quantitative Analytics Security Office
Authority Compliance

Lorem ipsum
Regulatory Impairment Compliance
Compliance and Regulatory
Reporting

Group Compliance and Governance headed by Group Chief • Ensure NBK Group and each subsidiary and branch in every
Compliance and Governance Officer (“GCC&GO”) and reports jurisdiction of operation abides by all relevant laws and
directly to the Board Risk and Compliance Committee regulations applicable to each of them.
(“BRCC”). • Assess/Review the implementation of compliance
procedures needed to verify compliance with the laws,
Group Compliance and Governance has the following objectives regulations, procedures and directives issued by Central
and responsibilities: Bank of Kuwait, Capital Markets Authority and relevant
Regulatory Bodies.
• Identify, assess, monitor and report on the compliance risks • Ensure the Bank’s compliance with the regulations related
faced by NBK Group. to Anti-Financial Crime and the Foreign Account Tax
• Review the compliance risk processes that are in place to Compliance Act (FATCA), Common Reporting Standard (CRS)
anticipate and effectively manage the impact of regulatory and other similar applicable regulations.
change on the Group’s operations. • Ensure sound Corporate Governance implementation across
the Group.

NBK Annual Report 2024

I. Capital Adequacy
The principal operating subsidiaries of the Group are presented
Capital adequacy, financial leverage and the use of various levels in note 24 of the Group’s consolidated financial statements. All
of Regulatory Capital are monitored regularly by the Group’s subsidiaries have been fully consolidated under the regulatory
Management and are also governed by guidelines of the Basel scope of consolidation for Regulatory Capital calculations (refer
Committee on Banking Supervision as adopted by the Central note 29 of the Group’s consolidated financial statements for
Bank of Kuwait (CBK) for licensed banks in Kuwait. consolidation treatment for the Islamic Banking subsidiaries of
the Group).
The CBK’s Basel III framework consists of three pillars:
Significant investments (as defined) in Banking, Financial and
• Pillar 1 provides a framework for measuring capital Insurance entities which are outside the scope of regulatory
requirements for credit, operational and market risk under consolidation are required to be subject to the threshold
the “Standardised Approach”. treatment prescribed under the CBK Basel III rules and are risk-
• Pillar 2 relates to the supervisory review process and weighted and/or deducted against equity.
emphasises the importance of the Internal Capital Adequacy
Assessment Process (ICAAP) performed by banks; and • All the significant investments in Banking and Financial
• Pillar 3 aims to complement the capital adequacy entities classified as Associates of the Group’s consolidated
requirements under Pillar 1 and Pillar 2 by requiring banks financial statements have been subject to the applicable
to provide a consistent and understandable disclosure threshold treatment and risk-weighted as prescribed.
framework which facilitates comparison, thus enhancing the • Other significant investments in Banking and Financial
safety and soundness of the banking industry in Kuwait. entities classified as equities have been subject to the
applicable threshold treatment and risk-weighted as
The Basel III minimum requirements for capital are underpinned prescribed.
by a leverage ratio that serves as a backstop to the risk-based
capital measures. There are also buffer requirements in the form ‘Minority’ Investments in Banking, Financial and Insurance
of a capital conservation buffer, a countercyclical capital buffer, entities classified as equities have been subject to the applicable
and an additional surcharge for banks designated as domestic threshold treatment and risk-weighted as required.
systemically- important.

A key objective of National Bank of Kuwait S.A.K.P. (the “Bank”) 2. Capital structure
and its subsidiaries (collectively the “Group”) is to maximise The Group’s Regulatory Capital comprises:
shareholders’ value with optimal levels of risk, whilst maintaining
a strong capital base to support the development of its business a) Common Equity Tier 1 (CET1) capital which is considered
and comply with externally imposed capital requirements. as the core measure of the Group’s financial strength and
includes share capital, share premium, eligible reserves,
retained earnings and eligible non-controlling interests (net of
1. Regulatory Scope of Consolidation Regulatory adjustments),
The core activities of the Group are retail, corporate and private
banking, investment banking, and asset wealth management & b) Additional Tier 1 (AT1) capital which consists of Perpetual
brokerage services. For further details on the Group’s activities, Tier 1 Capital Securities classified as Equity (note 21 of the
please refer to note 3 of the Group’s consolidated financial Group’s consolidated financial statements), eligible portion
statements. of AT1 instruments issued by subsidiaries and held by
third parties and certain additional eligible portion of non-
The consolidated financial statements and capital adequacy controlling interests, and
regulatory reports of the Group have been prepared and
consolidated on a consistent basis, save as otherwise disclosed. c) Tier 2 (T2) capital which consists of Subordinated Tier
For additional information on the basis of preparation and 2 Bonds classified as Debt (note 17 of the Group’s
basis of consolidation please refer to notes 2.1 and 2.3 of the consolidated financial statements), the allowed portions
Group’s consolidated financial statement for the year ended 31st of general provisions and certain additional eligible non-
December 2024. controlling interests.

77
2 Governance

The Bank’s share capital as of 31 December 2024 comprised The Regulatory Capital in KD Thousands for the Group is detailed
8,326,442,901 issued and fully-paid-up equity shares (2023: below:
7,929,945,620)

Table 1

Regulatory Capital 31 December 31 December

2024 2023

Common Equity Tier 1 3,639,713 3,442,577

Additional Tier 1 Capital 534,221 531,776

Tier 1 Capital 4,173,934 3,974,353

Tier 2 Capital 611,765 597,889

Total Regulatory Capital 4,785,699 4,572,242

3. Capital Adequacy Ratio

The Group ensures adherence to CBK’s requirements on Group- In addition, each banking subsidiary of the Group is directly
wide and stand-alone Capital Adequacy by regular monitoring. regulated by its local banking supervisor which sets and monitors
The Group’s capital forecasting process ensures pro-active its capital adequacy requirements as per the jurisdiction’s
actions and plans to ensure a sufficient capital buffer above requirements and ensures its compliance therewith.
minimum levels are in place at all times. This process is
supported by the use of proprietary capital-planning methodology The Minimum Capital requirements (MCR) and associated levels
which takes into consideration Regulatory Capital requirements, of Regulatory Capital expressed as a percentage of risk-weighted
rating agency views, stress-testing and bottom-up views of assets for NBK Group are:
business plans. These views then cascade into considerations on
what capital level is required.

Table 2

Regulatory Capital Levels 31 December 31 December

2024 2023

Common Equity Tier 1 7.0% 7.0%

Capital Conservation Buffer* 2.5% 2.5%

Domestic Systemically-Important Bank (D-SIB) Buffer 2.0% 2.0%

Common Equity Tier 1 (including Buffers) 11.5% 11.5%

Additional Tier 1 Capital 1.5% 1.5%

Tier 1 Capital 13.0% 13.0%

Tier 2 Capital 2.0% 2.0%

Total Regulatory Capital 15.0% 15.0%

The Group, having been designated as a Domestic Systemically Important Bank (D-SIB), is required to maintain an additional minimum
capital of 2%. Countercyclical Capital Buffer has not been required for the period ended 31 December 2024 in the MCR (nor at 2023).

NBK Annual Report 2024

The Capital Adequacy Ratios for the Group at consolidated level are as follows:

Table 3

CET1 Tier1 Total

Group for 31 December 2024 13.2% 15.1% 17.3%

Group for 31st December 2023 13.0% 15.0% 17.3%

The Capital Ratios of the banking subsidiaries based on their latest submissions (filed or approved, as applicable, under their
respective jurisdictions and regimes) were as follows:

Table 4 31 December 2024

CET1 Tier1 Total

NBK (International) plc [United Kingdom] 20.16% 20.16% 20.16%

National Bank of Kuwait France SA [France] 23.66% 23.66% 23.66%

NBK (Lebanon) S.A.L. [Lebanon] 28.38% 28.38% 28.67%

NBK Banque Privee (Suisse) S.A. [Switzerland] 39.34% 54.95% 54.95%

Boubyan Bank K.S.C.P. [Kuwait] 14.43% 16.77% 18.01%

Credit Bank of Iraq S.A. [Iraq] 74.63% 74.63% 74.66%

NBK Egypt S.A.E. [Egypt] 18.90% 18.90% 20.96%

31 December 2023
CET1 Tier1 Total
NBK (International) plc [United Kingdom] 19.11% 19.11% 19.11%
National Bank of Kuwait France SA [France] 32.06% 32.06% 32.06%
NBK (Lebanon) S.A.L. [Lebanon] 35.08% 35.08% 35.92%
NBK Banque Privee (Suisse) S.A. [Switzerland] 46.12% 64.43% 64.43%
Boubyan Bank K.S.C.P. [Kuwait] 14.27% 16.72% 17.97%
Credit Bank of Iraq S.A. [Iraq] 95.74% 95.74% 95.78%
NBK Egypt S.A.E. [Egypt] 17.86% 17.86% 19.92%

All the banking subsidiaries within the Group are in compliance with the minimum capital requirements as applicable under their
respective jurisdictions and have not reported any capital deficiencies. In general, the restrictions on transfer of funds or Regulatory
Capital within the Group are related to constraints that are imposed on entities by local regulators or tax constraints.

79
2 Governance

4. Profile of risk-weighted assets and capital charge corresponding figures pertaining to all the rest of the Group,
The Group’s risk-weighted capital requirements for credit, identical with the treatment in relevant reports submitted to CBK.
market and operational risks are shown below. The calculations The Capital charge in section 4.1, 4.2 and 4.3 below represent the
include Boubyan Bank K.S.C.P., an Islamic Banking subsidiary. minimum requirement for Kuwait Banking sector at 13 % (2023:
For purposes of determining risk-weighted assets and capital 13% and excluding D-SIB Buffer of 2% for NBK Group).
required, exposures and assets at Boubyan Bank K.S.C.P. and
its consolidated banking subsidiary are risk-weighted, and 4.1. Credit risk:
capital charge is calculated, in accordance with CBK regulations The total capital charge in respect of credit risk as of 31
applicable to banks providing banking services compliant with December 2024 was KD 3,253,566 thousand (2023: KD 3,141,101
Codes of Islamic Sharia’a. Those figures are then added to thousand) as detailed below:

Table 5 KD 000s

31 December 2024 31 December 2023

Gross credit Risk- Capital Gross credit Risk- Capital

exposure weighted charge exposure weighted charge
assets assets

Cash 189,144 - - 184,832 - -

Claims on sovereigns 8,284,469 728,782 94,742 7,774,130 1,096,919 142,599

Claims on International Organisations 184,963 - - 153,308 - -

Claims on public sector entities 2,070,558 488,194 63,465 1,675,638 351,726 45,724

Claims on multilateral development banks 280,048 37,705 4,902 248,550 35,420 4,605

Claims on banks 5,877,210 1,581,033 205,534 5,738,584 1,619,110 210,484

Claims on corporates 19,995,151 14,394,833 1,871,328 18,209,980 13,438,284 1,746,977

Regulatory retail exposure 7,788,205 6,690,567 869,774 7,648,318 6,663,678 866,278

Past due exposures 161,729 134,286 17,457 161,944 134,775 17,521

Other exposures 1,506,281 972,029 126,364 1,385,833 822,407 106,913

Total 46,337,758 25,027,429 3,253,566 43,181,117 24,162,319 3,141,101

“Other exposures” above includes an amount of KD 393,745 The Group’s figures relating to exposures and risk-weighted assets
thousand negative (2023: KD 422,925 thousand negative) have been classified to provide a meaningful representation of
representing that amount of general provision in excess of a the standard portfolio asset classes.
maximum of 1.25% of Credit risk-weighted assets which is
allowed in arriving at Tier 2 capital.

NBK Annual Report 2024

4.2. Market risk:
The total capital charge at 13% (2023: 13%) in respect of market
risk was KD 62,280 thousand (2023: KD 55,171 thousand) as
detailed below:

Table 6 KD 000’s

31 December 31st December

2024 2023

Interest rate risk 1,460 1,403

Foreign exchange risk 60,820 53,768

Total 62,280 55,171

4.3. Operational risk: “BRCC”) and the Group Executive Committee (the “EC”), which
The total capital charge at 13% (2023: 13%) in respect of ensure that risk-taking authority and policies are effectively
operational risk was KD 272,378 thousand (2023: KD 244,784 communicated from the Board to the appropriate business units.
thousand). This capital charge was computed by categorising The Group risk management, Group compliance and Governance,
the Group’s activities into 8 business lines (as defined in the CBK and Group internal audit functions assist Executive Management
Basel III framework) and multiplying the business line’s three-year in controlling and actively managing the Group’s overall risk
average gross income by a pre-defined beta factor. profile.

4.4. Domestic Systemically-Important Bank (D-SIB): The key features of the Group’s comprehensive risk management
The additional capital requirement in respect of the Group having policy are:
been designated as a Domestic Systemically-Important Bank
(D-SIB) of 2% as at 31 December 2024 amounts to KD 552,034 • the Board provides overall risk management direction and
thousand (2023: KD 529,393 thousand) oversight;
• the Group’s risk appetite is reviewed by the BRCC and
ultimately approved by the Board;
• risk management is embedded in the Group as an intrinsic
II. Risk management process and is a core competency of all its employees;
• the Group manages its credit, market, liquidity, IT and
In common with other financial institutions, risk, including credit operational risk in a co-ordinated manner within the
risk, market risk, liquidity risk, Information Technology (IT), organisation; and
operational and environmental, social and governance (ESG) risks, • the Group’s internal audit function reports to the Board Audit
is inherent in the Group’s activities. The complexity in the Group’s Committee (the “BAC”) and provides independent validation
business operations and diversity of geographical locations of the business units’ compliance with risk policies and
require efficient and timely identification, measurement, procedures and the adequacy and effectiveness of the risk
aggregation and management of risks and efficient allocation management framework on a Group-wide basis.
of capital towards achieving the ultimate objective of protecting
the Group’s asset values and income streams in order to protect The function also ensures that:
the interests of its shareholders and external fund providers,
increase shareholder value and achieve a return on equity that • The Group’s overall business strategy is consistent with its
is commensurate with the risks assumed. Management of risk appetite approved by the Board and allocated by the
these inherent risks is critical to ensuring the Group’s financial Executive Committee.
soundness and profitability. • Risk policies, procedures and methodologies are consistent
with the Group’s risk appetite.
The Group’s risk management framework is integral to its • Appropriate risk management architecture and systems are
operations and culture, and it seeks to manage risk in a developed and implemented; and
structured, systematic manner through a global risk policy, which • Risks and limits of the portfolio are monitored throughout the
embeds comprehensive risk management into the organisational Group, including at appropriate “regional” levels.
structure, risk measurement and monitoring processes.
The Group regularly assesses the adequacy and effectiveness
Ultimate responsibility for setting out risk appetite and effective of its risk management framework considering the changing risk
management of risk rests with the Board of Directors. This is environment.
managed through the Board Risk & Compliance Committee (the

81
2 Governance

1. Risk Management Strategy The Group regularly assesses the adequacy and effectiveness
The key elements of the Board-approved risk strategy are: of its reporting tools and metrics considering the changing risk
environment.
• maintaining stability and business continuity during stress
situations; The Group augments its overall framework for governance and
• ensuring effective and adequate compliance with Regulatory capital planning and management by undertaking an ICAAP, which
Capital requirements and internal capital targets in keeping includes “scenario testing” at periodic, regular intervals. Amongst
with the Group’s strategy; the key objectives of the ICAAP is to quantify potential inherent
• developing the Group’s IT infrastructure and using modern risks which the Group faces not covered under Pillar 1. In line with
methods to raise the professional level and levels of the guidelines from the Basel Committee and CBK, key principles
experience of human resources; of the Group’s ICAAP include:
• effective risk planning through an appropriate risk appetite;
and • Responsibilities of the Board and Senior Management.
• performing stress tests consistently to assess the impact on • Sound capital management.
the Group’s capital requirements, capital base and liquidity • Comprehensive assessment of Pillar II risks, e.g., Credit (sector,
position. name, and geographic concentration), residual credit risk,
residual market risk, Interest Rate Risk in Banking Book (IRRBB),
2. Risk Appetite Liquidity, Legal, Reputational, Strategic Risk, Climate Risk and
The Group’s risk appetite defines the maximum limit of risk that other specific risks which are not covered in Pillar I, etc.
the Group is willing to accept in relevant business categories to • Monitoring and reporting.
achieve an optimal balance of risk and return which will enable • Control and review of the process.
the achievement of its strategic objectives. Any risk which
breaches the Group’s stated risk appetite must be mitigated as a 4. Risk management processes
matter of priority to within acceptable levels. Through the Group’s risk management framework, transactions
and outstanding risk exposures are quantified and compared
• The risk appetite is annually reviewed and presented by against authorised limits, whereas non-quantifiable risks are
the BRCC to the Board for final approval. This ensures monitored against policy guidelines and key risk and control
the risk appetite statements are consistent with the indicators. Any discrepancies, excesses or deviations are
Group’s strategy and business environment. Through the escalated to Management for appropriate action.
risk appetite statements, the Board communicates to
Management the acceptable level of risk for the Group, The key risks assumed by the Group in its daily operations are
determined in a manner which meets the objectives of outlined below:
shareholders, depositors and regulators. This ensures Risk
Appetite remains aligned to the Group’s strategic objectives, 4.1. Credit risk
expectations of Regulators and stakeholders including Credit risk is defined as the likelihood that a customer or
clients, investors, and financial markets, and remains fit for counterparty is unable to meet the contracted financial
purpose. obligations resulting in a default situation and/or financial loss.
• The Group risk management and Group Compliance & These risks arise in the Group’s normal course of business.
Governance functions aim to identify early warnings of risk
limit and risk appetite breaches and are responsible for 4.1. 1. Credit risk management strategy
notifying them to the BRCC and the Board. The approach to credit risk management is based on the
foundation to preserve the independence and integrity of the
3. Scope and nature of risk reporting tools credit risk assessment, management and reporting processes,
The Group’s risk management framework enables the Group to combined with clear policies, limits and approval structures which
identify, assess, limit and monitor risks using a comprehensive guide the day-to-day initiation and management of the Group’s
range of quantitative and qualitative tools. Some of these tools credit risk exposure. This approach comprises credit limits which
are common to a number of risk categories, while others are are established for all customers after a careful assessment of
tailored to the particular features of specific risk categories and their creditworthiness.
enable generation of information such as:
Standing procedures, outlined in the Group’s Credit Policies
• Credit risk in commercial and consumer lending and other and Manuals, require that all credit proposals be subjected to
asset exposures, such as collateral coverage ratio, limit detailed screening by the domestic or international credit risk
utilisation, past-due alerts, etc. management divisions prior to submission to the appropriate
• Quantification of the susceptibility of the market value credit committee. Whenever necessary, credit facilities are
of single positions or portfolios to changes in market secured by acceptable forms of collateral to mitigate the related
parameters (commonly referred to as sensitivity analysis). credit risks. The Board of Directors defines the Group’s credit
• Quantification of exposure to losses due to extreme risk management strategy and ratifies significant credit risk
movements in market prices or rates. policies approved by the Group’s Executive Committee to ensure
alignment of the Group’s exposure with its risk appetite.

NBK Annual Report 2024

4.1.2. Credit risk management structure for reviewing, approving or recommending domestic credit
Senior management implements the Board of Directors’ credit proposals that exceed the Management Credit Committee’s
risk strategy and develops policies and procedures for identifying, competence as well as those concerning ‘criticised’ accounts
assessing, monitoring, and controlling credit risk. [which, as part of the Group’s overall credit quality monitoring
processes, are accounts which, although neither classified
The Group’s Executive Committee, chaired by the Group Chief as ‘past due’ nor ‘past due and impaired’, have experienced
Executive Officer (GCEO) and comprising senior executives from difficulties which may cause them to become categorised
the business divisions, meets regularly to review significant credit as ‘irregular’ accounts (being accounts which are either
policies and the Group’s corporate and consumer credit portfolios classified as ‘past due’ or ‘past due and impaired’)];
and advises the Board appropriately. • Management Credit Committee (MCC), which consists of the
Head of Corporate Banking, the Deputy Head of Corporate
All significant credit policies and amendments to policies are Banking, the Head of Domestic Credit Risk Management
reviewed and approved annually by the Executive Committee and and a number of senior executives in Corporate Banking and
ratified by the Board. Within this framework, limits and approval is responsible for reviewing, approving or recommending
authorities are exercised by the officers delegated with defined domestic credit proposals, except those concerning
approval authorities. ‘criticised’ accounts and those that exceed the Management
Credit Committee’s competence, which are escalated to the
In compliance with CBK regulations, lending to individual Board Senior Credit Committee;
Members and related parties is fully secured and monitored by • Senior International Credit Committee (SICC), which consists
the Senior Credit Committee and the Board Credit Committee of the, GCEO, the Deputy GCEO and the Group Chief Risk
(BCC). Furthermore, facilities granted to them are made on Officer (GCRO) and is responsible for reviewing, approving
substantially the same terms, including interest rates and or recommending all credit proposals originating from the
collateral, as those prevailing at the time for comparable Group’s international offices that exceed the Management
transactions with unrelated parties. All such facilities are International Credit Committee’s mandate as well as those
approved by the Board of Directors in line with the relative concerning ‘criticised’ accounts; and
authorities from the Shareholders’ General Assembly. • Management International Credit Committee (MICC), which
consists of the Head of Group Risk Management , the
Country limits are determined based on the outlook of economic Chief Credit Officer, the CEO International Banking Group
and political factors, along with the review of reports from and certain Senior members of the International Banking
recognised and creditable market sources and application of Group and International Credit Risk Management and is
local business and market knowledge. Significant country-limit responsible for reviewing, approving or recommending all
exposures are subject to periodic approval by the Board of credit proposals originating from the Group’s international
Directors or the Board Credit Committee. offices except those concerning ‘criticised’ accounts, which
are escalated to the Senior International Credit Committee.
4.1.3. Key features of corporate credit risk management
• Corporate credit facilities are granted based on detailed The credit committees have a set of approval authorities in place
credit risk assessments which consider the purpose of the as delegated by the Board and which vary by reference to the
facility and source of repayment, prevailing and potential type of counterparty (for example, sovereign, financial institution
macro-economic factors, industry trends and the customer’s and corporate), the counterparty rating (investment grade or
positioning within its industry peer-group. speculative) and whether the facility is secured or non-cash,
• Internal credit-rating models are regularly reviewed by among other factors. Specific approval authorities exist for fully-
the independent Model validation team (under Group secured facilities as well as Watch List and ‘Criticized’ accounts.
Compliance & Governance) in co-ordination with Group Risk
Management (GRM), line management and the Executive In addition, the Group’s international offices have their own
Committee and continually enhanced in line with industry hierarchy of credit committees.
credit risk management “best practices”.
Credit facility administration is undertaken by a segregated
All new proposals, along with reviews of material changes to function to ensure proper execution of all credit approvals and
existing credit facilities, are reviewed and approved by the maintenance of documentation, and proactive control over
appropriate credit committee. maturities, expiry of limits, collateral valuation and contractual
covenants.
The Group has the following hierarchy of credit committees at the
Head Office Level: 4.1.4 Key features of consumer credit risk management
The Group’s consumer portfolio credit risks are managed through
• Board Credit Committee (BCC), which consists of four Board an independent unit, which is part of the GRM function and
Members and approves all facilities exceeding the mandate works with the consumer banking business. The consumer risk
of the other committees; strategy aims to support portfolio growth within acceptable risk
• Senior Credit Committee (SCC), which consists of the, appetite thresholds and advises the Consumer Banking Group
GCEO, the Deputy GCEO, the CEO Kuwait, the Chief Credit with prudent lending policies based on portfolio performance.
Officer, the Head of Corporate Banking and a number of Consumer Credit Risk Management assesses the external
senior executives in Corporate Banking and is responsible environment and focuses on growth for selected segments and

83
2 Governance

proactively monitors the portfolio. They are aligned with key annually. Semi-annual “short-form” reviews are also performed
concepts of risk management, namely governance, control and subject to certain additional criteria.
measurement and reporting.
Financial institutions
Consumer Credit Risk is managed through a framework which The Group’s policy is to assess the credit risk in facilities granted
sets out policies and procedures covering the measurement and to financial institutions by utilizing data from external credit
management of credit risk. There is a clear segregation of duties agencies. Such data are further complemented by the bilateral
between transaction originators in the businesses and approvers. transaction history with the relevant financial institution and
Within this framework, all credit exposure limits are approved existing and potential relationship with the Group. The resulting
within a defined credit approval authority framework. Policies and credit facilities are structured across various products and
procedures specific to each business/product line are approved maturities and are subject to review at least annually.
by the Executive Committee and significant policies are ratified
by the Board. Credit loss recognition process/quantification Consumer lending
is handled by Consumer Risk Management Unit, within GRM, The independence of the risk management function helps to
independent of the business. balance appropriate near-term and longer-term objectives.
Consumer lending criteria incorporate CBK regulatory guidelines
4.1.5 Credit review procedures and loan classification and Group policies related to consumer credit facilities, such
Corporate and SMEs as debt-to-income ratio, minimum qualifying income and
The Group’s policy is to assess the credit risk in commercial limits on advances by product type. Additional inputs utilized
banking through a risk-rating process which provides transparency include applicant characteristics obtained from credit bureaus,
and consistency to enable comparison between obligors. The particularly the Kuwait credit bureau, to assist in assessing an
Group uses an industry-standard risk-rating tool to make these applicant’s ability to repay and the probability of default.
assessments. Under this risk-rating framework, the obligors are
rated based on financial and business assessments. Consumer Credit Risk Management proactively monitors
portfolios considering the external environment, analyzing growth
The risk-rating process derives obligor risk-ratings (“ORRs”) and in selected segments and, as per risk strategy, aims to support
facility risk-ratings (“FRRs”). The rating methodology focuses on portfolio growth within acceptable risk appetite thresholds.
factors such as operating performance, liquidity, debt service
and capital structure. The ratio analysis includes the assessment Consumer credit risk is monitored with three lines of defense.
of each ratio’s trend across multiple periods, in terms of both
rate change and the volatility of the trend. It also compares the
value of the ratio for the most-recent period with the values First Line - The Business owns and manages risks and
of the comparable peer group. Qualitative assessments of the controls (including the identification and
operations, liquidity and capital structure are also included in the assessment of risk and controls) in adherence
assessment. The Group has implemented risk-rating models for to credit policies governing the business and
commercial, real estate, high-net-worth individuals and project across the value chain in line with risk appetite.
finance facilities. The Group also has an approved framework for Second Line - The Consumer Credit Risk Management
FRRs. While the ORR does not take into consideration factors function develops and maintains the risk
such as the availability of collateral and support, the FRR is management framework which enables the
a measure of the quality of the credit exposure based on the business to manage the risk and control
expected loss in the event of default after considering collateral environment within the Board-approved risk
and support. The availability of eligible collateral or support appetite.
substantially reduces the extent of the loss in the event of default Third Line - Group Internal Audit independently
and such risk mitigating factors are reflected in the FRR. tests, verifies and evaluates controls for
effective credit risk management and the
In cases where the risk-rating tool is not applicable, the Bank implementation of policies and procedures.
assigns a rating based on an internal assessment which is
mapped to the relevant external rating scale. 4.1.6. Group credit risk monitoring and portfolio management
The Group has a portfolio risk-rating process through which
The Group classifies its exposure in accordance with the North the overall portfolio quality is assessed at regular intervals and
American Industry Classification System Code in addition to the analyzed for credit committees. In addition, a RAROC (Risk-
classification based on purpose codes as defined by the CBK. Adjusted Return on Capital) model is in use to guide business
This additional classification helps to improve the accuracy of lines and Management in pricing credit facilities granted to
ORRs through peer group analysis in respect of performance and corporate clients. The RAROC model is based on the premise that
financial indicators and allows the Group to classify its portfolio pricing should be aligned with the risk embedded in the proposal.
into sub-segments which facilitate analysis and improve the
management of concentrations. The Group’s credit exposures are regularly reviewed and
monitored through a system of triggers and early-warning signals
Credit facilities to Corporates and SMEs are structured across aimed at detecting adverse symptoms which could result in a
various products and maturities and are subject to review at least deterioration of credit risk quality. The triggers and early-warning

NBK Annual Report 2024

systems along with market intelligence, facility utilization and
collateral valuation updates are included in the regular review Credit risk mitigants such as collateral and guarantees from third
of the credit facilities to enable timely corrective action by parties are effective mitigating factors within the Group’s portfolio
Management. These reviews are performed on a semi-annual, and collateral quality is continuously monitored and assessed.
annual and ad-hoc basis as required. The results of the monitoring Risk transfer in the form of syndications, risk participation
process are reflected in the internal rating. arrangements with other banks and sale of loans are common
practices to manage the Group’s exposures.
The total portfolio credit risk is monitored on an ongoing basis
with formal monthly and quarterly reporting to ensure senior 4.1.8 Management of credit collateral and valuation
management awareness of shifts in credit quality and portfolio The main types of collateral accepted by the Group include:
performance along with changing external factors such as
economic and business cycles. • cash collateral;
• quoted shares and units in collective investment schemes;
Cross-border exposures are monitored by the central credit risk • bank guarantees;
management function against specific limits set for this purpose. • commercial and residential real estate; and
• eligible debt instruments (principally sovereign and bank
Consumer credit risk reporting also includes a detailed obligors).
dashboard for consumer and small-business lending, covering the
entire credit life-cycle, including delinquency monitoring such as The custody and daily “mark to market” (revaluation) of financial
ageing and migration and loss recognition. collateral, inclusive of shares, are performed independent of the
business units. Real estate collateral except private residences is
4.1.7. Group credit risk mitigation strategy valued on an annual basis.
Portfolio diversification is a cornerstone of the Group’s credit
risk mitigation strategy which is implemented through customer, In accordance with the Group’s credit policies, banks and
industry and geographical limit structures. creditworthy companies and individuals with high net worth
are accepted as guarantor counterparties, subject to credit
In accordance with CBK regulations, the Group limits its credit risk assessment. However, in accordance with the CBK Basel
concentration per group of related entities to 15.0 per cent. of III framework, only cash collateral, guarantees from banks with
the Bank’s Regulatory Capital. This does not apply to government defined high credit-quality ratings, quoted shares, eligible debt
and quasi-government entities, agencies and departments in instruments and units in collective investment schemes are
the GCC countries that do not work on a commercial basis and recognised as risk mitigation for capital adequacy purposes.
subject to CBK approval, or to banks. The Group also measures its
concentration levels across sectors, geographies and products to The Group’s credit exposures were covered by the following
ensure and enhance the portfolio oversight and diversification. eligible financial collateral and guarantees:

Table 7 KD 000s

31 December 2024 31 December 2023

Gross credit Eligible Eligible Gross credit Eligible Eligible

exposure Credit Risk guarantees exposure Credit Risk guarantees
Mitigation Mitigation

Cash 189,144 - - 184,832 - -

Claims on sovereigns 8,284,469 69,486 - 7,774,130 77,155 -

Claims on International Organisations 184,963 - - 153,308 - -

Claims on public sector entities 2,070,558 - - 1,675,638 - -

Claims on multilateral development banks 280,048 - - 248,550 - -

Claims on banks 5,877,210 51,215 1,437,826* 5,738,584 53,327 1,324,512*

Claims on corporates 19,995,151 1,267,547 - 18,209,980 1,345,188 -

Regulatory retail exposure 7,788,205 162,713 - 7,648,318 173,145 -

Past due exposures 161,729 5,256 - 161,944 5,057 -

Other exposures 1,506,281 - - 1,385,833 - -

Total 46,337,758 1,556,217 1,437,826 43,181,117 1,653,872 1,324,512

* “Memorandum” item where banks act as “guarantors”

85
2 Governance

4.1.9. Gross, average and net credit exposures

The Group’s gross credit exposures, average credit exposures and the former adjusted for credit conversion and credit risk mitigation
factors, respectively, are detailed below:

Table 8 KD 000s

31 December 2024 31 December 2023

Gross credit Funded Unfunded Gross credit Funded Unfunded

exposure exposure exposure exposure exposure exposure

Cash 189,144 189,144 - 184,832 184,832 -

Claims on sovereigns 8,284,469 8,281,239 3,230 7,774,130 7,762,498 11,632

Claims on International Organisations 184,963 184,963 - 153,308 153,308 -

Claims on public sector entities 2,070,558 1,961,816 108,742 1,675,638 1,566,677 108,961

Claims on multilateral development banks 280,048 280,048 - 248,550 248,550 -

Claims on banks 5,877,210 3,961,132 1,916,078 5,738,584 4,003,076 1,735,508

Claims on corporates 19,995,151 16,005,551 3,989,600 18,209,980 14,600,321 3,609,659

Regulatory retail exposure 7,788,205 7,722,805 65,400 7,648,318 7,586,987 61,331

Past due exposures 161,729 161,290 439 161,944 160,335 1,609

Other exposures 1,506,281 1,506,281 - 1,385,833 1,385,833 -

Total 46,337,758 40,254,269 6,083,489 43,181,117 37,652,417 5,528,700

Table 9: KD 000s
Average Credit Exposures* 31 December 2024 31 December 2023
Average Average
credit Funded Unfunded credit Funded Unfunded
exposure exposure exposure exposure exposure exposure
Cash 200,641 200,641 - 193,912 193,912 -
Claims on sovereigns 7,443,939 7,439,543 4,396 7,274,160 7,259,055 15,105
Claims on International Organisations 176,332 176,332 - 153,335 153,335 -
Claims on public sector entities 1,828,170 1,711,132 117,038 1,644,549 1,574,834 69,715
Claims on multilateral development banks 395,354 395,354 - 173,893 173,893 -
Claims on banks 6,111,253 4,295,889 1,815,364 6,068,253 4,262,590 1,805,663
Claims on corporates 19,265,342 15,375,582 3,889,760 17,441,121 13,926,788 3,514,333
Regulatory retail exposure 7,679,732 7,618,489 61,243 7,604,472 7,544,301 60,171
Past due exposures 184,112 183,601 512 208,155 206,546 1,609
Other exposures 1,449,388 1,449,388 - 1,366,939 1,366,939 -
Total 44,734,263 38,845,951 5,888,313 42,128,789 36,662,193 5,466,596

*Based on average of four quarter-end balances

NBK Annual Report 2024

Table 10: KD 000s

Net Credit Exposures 31 December 2024 31 December 2023

Net credit Funded Unfunded Net credit Funded Unfunded

exposure exposure exposure exposure exposure exposure

Cash 189,144 189,144 - 184,832 184,832 -

Claims on sovereigns 8,213,770 8,212,841 929 7,692,969 7,685,811 7,158

Claims on International Organizations 184,963 184,963 - 153,308 153,308 -

Claims on public sector entities 2,046,360 1,961,816 84,544 1,659,185 1,566,677 92,508

Claims on multilateral development banks 280,048 280,048 - 248,550 248,550 -

Claims on banks 4,920,151 4,026,670 893,481 4,912,191 4,077,353 834,838

Claims on corporates 16,836,990 14,761,566 2,075,424 15,285,571 13,460,017 1,825,554

Regulatory retail exposure 7,591,611 7,576,651 14,960 7,443,375 7,431,099 12,276

Past due exposures 156,254 156,034 220 156,083 155,278 805

Other exposures 1,506,281 1,506,281 - 1,385,833 1,385,833 -

Total 41,925,572 38,856,014 3,069,558 39,121,897 36,348,758 2,773,139

As at 31 December 2024, 42 % (2023: 41%) of the Group’s net credit risk exposure was rated by External Credit Assessment
Institutions (ECAIs) recognised for the purpose, as detailed below:

Table 11: KD 000s

Net Credit Exposures 31 December 2024 31 December 2023

Net credit Rated Unrated Net credit Rated Unrated

exposure exposure exposure exposure exposure exposure

Cash 189,144 - 189,144 184,832 - 184,832

Claims on sovereigns 8,213,770 8,213,770 - 7,692,969 7,692,969 -

Claims on International Organizations 184,963 - 184,963 153,308 - 153,308

Claims on public sector entities 2,046,360 362,903 1,683,457 1,659,185 254,029 1,405,156

Claims on multilateral development banks 280,048 280,048 - 248,550 248,550 -

Claims on banks 4,920,151 4,870,108 50,043 4,912,191 4,872,643 39,548

Claims on corporates 16,836,990 4,076,063 12,760,927 15,285,571 3,099,397 12,186,174

Regulatory retail exposure 7,591,611 - 7,591,611 7,443,375 - 7,443,375

Past due exposures 156,254 - 156,254 156,083 - 156,083

Other exposures 1,506,281 - 1,506,281 1,385,833 - 1,385,833

Total 41,925,572 17,802,892 24,122,680 39,121,897 16,167,588 22,954,309

The Group uses external ratings (where available) from recognised and creditable market sources to supplement internal ratings
during the process of determining credit limits. Public issue instruments without external ratings are risk-weighted at 100% for capital
adequacy purposes.

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The geographical distribution of the gross credit exposure before taking into consideration credit enhancements is as detailed below:

Table 12 KD 000’s

31 December 2024 Middle East

and North North
Africa America UK & Europe Asia Others Total

Cash 174,078 1,021 14,045 - - 189,144

Claims on sovereigns 5,960,374 1,776,850 396,259 150,986 - 8,284,469

Claims on International Organizations - - - 184,963 - 184,963

Claims on public sector entities 1,735,170 5,670 329,193 525 - 2,070,558

Claims on multilateral development banks 272,332 7,716 - - - 280,048

Claims on banks 3,285,514 293,300 1,273,848 1,010,848 13,700 5,877,210

Claims on corporates 13,715,163 984,582 2,762,816 2,001,354 531,236 19,995,151

Regulatory retail exposure 7,769,464 601 9,442 2,812 5,886 7,788,205

Past due exposures 103,690 38,020 20,019 - - 161,729

Other exposures 887,317 184,415 313,655 40,146 80,748 1,506,281

Total 33,903,102 3,292,175 5,119,277 3,391,634 631,570 46,337,758

KD 000’s

31 December 2023 Middle East

and North North
Africa America UK & Europe Asia Others Total

Cash 163,386 2,082 19,364 - - 184,832

Claims on sovereigns 6,295,699 1,090,340 273,806 114,285 - 7,774,130

Claims on International Organizations - - 0 153,308 - 153,308

Claims on public sector entities 1,659,199 - 15,919 520 - 1,675,638

Claims on multilateral development banks 234,614 7,684 6,252 - - 248,550

Claims on banks 3,128,757 254,745 1,265,293 1,075,242 14,547 5,738,584

Claims on corporates 12,410,504 873,299 2,671,620 1,796,842 457,715 18,209,980

Regulatory retail exposure 7,632,780 612 7,587 3,262 4,077 7,648,318

Past due exposures 111,874 35,328 14,742 - - 161,944

Other exposures 979,172 151,257 190,950 9,261 55,193 1,385,833

Total 32,615,985 2,415,347 4,465,533 3,152,720 531,532 43,181,117

NBK Annual Report 2024

The Group’s gross credit exposure by residual contractual maturity is as detailed below:

Table 13 KD 000’s

31 December 2024 Up to 3 to
3 months 12 months Over 1 year Total

Cash 189,144 - - 189,144

Claims on sovereigns 5,382,784 461,235 2,440,450 8,284,469

Claims on International Organizations 134,074 50,889 - 184,963

Claims on public sector entities 714,759 166,762 1,189,037 2,070,558

Claims on multilateral development banks 60,054 10,135 209,859 280,048

Claims on banks 2,820,500 1,013,050 2,043,660 5,877,210

Claims on corporates 6,915,329 3,158,374 9,920,448 19,994,151

Regulatory retail exposure 212,572 522,547 7,053,086 7,788,205

Past due exposures 110,971 - 50,758 161,729

Other exposures 283,540 96,642 1,126,099 1,506,281

Total 16,823,727 5,479,634 24,033,397 46,336,758

KD 000’s

31 December 2023 Up to 3 to
3 months 12 months Over 1 year Total

Cash 184,832 - - 184,832

Claims on sovereigns 4,576,933 876,419 2,320,778 7,774,130

Claims on International Organizations 101,232 52,076 - 153,308

Claims on public sector entities 479,601 135,171 1,060,866 1,675,638

Claims on multilateral development banks 103,701 3,136 141,713 248,550

Claims on banks 2,696,721 990,081 2,051,782 5,738,584

Claims on corporates 5,615,478 3,206,072 9,388,430 18,209,980

Regulatory retail exposure 225,458 511,377 6,911,483 7,648,318

Past due exposures 109,025 - 52,919 161,944

Other exposures 253,888 47,729 1,084,216 1,385,833

Total 14,346,869 5,822,061 23,012,187 43,181,117

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2 Governance

4.1.10. Impairment Expected Credit Loss and/or Provisions (ii) the provisions required by the CBK instructions of December
1996 since amended in 2007.
Policy since 1 January 2018
Credit facilities are classified as past-due when a payment has
Impairment of financial assets other than credit facilities not been received on its contractual payment date, or if the
The Group recognises Expected Credit Losses (ECL) under IFRS 9 facility is in excess of pre-approved limits.
on:
A credit facility is considered as past-due and impaired if the
• investment in debt securities measured at amortised cost or interest or profit or a principal instalment is past due for more
fair value through other comprehensive income; and than 90 days, and as impaired if the carrying amount of the
• balances and deposits with banks. facility is greater than its estimated recoverable value.

Equity investments are not subject to Expected Credit Losses. Past-due and past-due and impaired facilities are managed
The ECL on financial assets other than credit facilities as at 31 and monitored as “irregular” facilities and are classified into
December 2024 amounted to KD 68,084 thousand. (2023: KD the following four categories, which are then used to guide the
72,707 thousand) provisioning process:

Impairment of credit facilities • Watchlist, irregular for a period up to and including 90 days
Credit facilities granted by the Group consist of: (no specific provision required);
• Substandard, irregular for a period from and including 91
• loans and advances, Islamic financing to customers including days and up to and including 180 days (20 per cent. specific
credit commitments; provision required);
• letters of credit and financial guarantee contracts including • Doubtful, irregular for a period from and including 181 days
credit commitments and up to and including 365 days (50 per cent. specific
provision required); and
Impairment on credit facilities is recognised in the consolidated • Bad, irregular for a period exceeding 365 days (100 per cent.
statement of financial position at an amount equal to the higher specific provision required).
of:
The Group may also include a credit facility in one of the above
(i) ECL under IFRS 9 according to the CBK guidelines dated 25th categories based on Management’s judgement of a customer’s
December 2018, financial and/or non-financial circumstances.

The Group in estimating ECL on credit facilities has taken into

consideration the following key parameters based on inputs from
CBK:

• a floor for estimating probability of default (“PD”) for specific

portfolios;
• eligible collateral with haircuts for determining loss given
default (“LGD”) and a floor LGD;
• deemed maturity for exposures in Stage 2;
• a credit conversion factor (“CCF”) on utilised and un-utilised
portions for cash and non-cash facilities;
• a days-past-due backstop, and a rating notch downgrade for
stage movement for specific portfolios; and
• a stage 2 observation period prior to curing.

Refer Notes of the Group’s consolidated financial statement for

further details on ECL. and

NBK Annual Report 2024

The Group impaired loan portfolio as of 31 December 2024 was KD 329,120 thousand (2023: KD 318,386 thousand) against which a
specific provision of KD 175,926 thousand (2023: 159,150 thousand) has been made, as detailed below:

Table 14 KD 000’s

Specific provision
recovered (written
31 December 2024
Past due and Related off), net of exchange
impaired financing Specific provision rate movement

Claims on corporates 182,652 69,950 (53,992))

Regulatory retail exposure 146,468 105,976 (26,176)

Total 329,120 175,926 (80,168)

KD 000’s

Specific provision
Past due and recovered (written
31 December 2023
impaired Related off), net of exchange
financing Specific provision rate movement

Claims on corporates 179,233 70,402 (21,903)

Regulatory retail exposure 139,153 88,748 (25,797)

Total 318,386 159,150 (47,700)

The geographical distribution of “past-due and impaired” financing and the related specific provision are as follows:

Table 15 KD 000’s

31 December 2024 Middle East

and North North
Africa America UK & Europe Asia Others Total
Past due and impaired financing 263,511 45,185 20,424 - - 329,120
Specific provision 163,256 12,267 403 - - 175,926

KD 000’s

31 December 2023 Middle East

and North North
Africa America UK & Europe Asia Others Total
Past due and impaired financing 248,040 55,457 14,889 - - 318,386
Specific provision 138,874 20,129 147 - - 159,150

In accordance with CBK regulations, minimum general provisions The adequacy of provisions is regularly evaluated and monitored
of 1% for cash facilities and 0.5% for non-cash facilities, by the Provision Committee.
respectively, are made on all applicable credit facilities (net of
certain restricted categories of collateral) which are not subject to
specific provisioning.

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2 Governance

The Group’s total provision as at 31 December 2024 was KD 910,214 thousand (2023: KD 903,390 thousand) inclusive of a general
provision of KD 710,635 thousand (2023: KD 729,148 thousand) as detailed below:

Table 16 KD 000’s

31 December 31 December
2024 2023

Claims on sovereigns 3,211 3,689

Claims on public sector entities 11,595 9,037

Claims on banks 5,745 5,009

Claims on corporates 604,001 627,383

Regulatory retail exposure 86,083 84,030

Total 710,635 729,148

The total general provision above includes KD 35,786 thousand (2023: KD 31,568 thousand) relating to “non-cash” facilities in
accordance with CBK regulations.

The geographical distribution of the general provision on “cash” facilities is as follows:

Table 17 KD 000’s

Middle East
and North North
Africa America UK & Europe Asia Others Total

31 December 2024 621,902 7,735 35,040 6,979 3,193 674,849

31 December 2023 650,045 6,752 29,970 6,464 4,349 697,580

The analysis of specific and general provisions is further detailed • Clear segregation of “front”, “back” and ‘middle’ office
in note 13 of the Group’s consolidated financial statements. duties.
• Bank’s approach to accept, limit and increase Market Risks
The provisions for credit facilities as at 31 December 2024 was • Regular and effective monitoring and reporting of exposures
KD 910,214 thousand (2023: KD 903,390 thousand) computed and risk measures
pursuant to the CBK instructions of December 1996 since • Regular monitoring of market prices and valuation of
amended, are higher than the IFRS 9 ECL for credit facilities as at financial instruments
31 December 2024 which was KD 634,365 thousand (2023 : KD • Defined set of internal limits and regular reporting on the
615,659 thousand). adherence to those limits
• Regular independent review of internal controls and limits
4.2. Market risk • Implementation of adequate infrastructure
Market risk is defined as the potential loss in value of financial
instruments or contracts or portfolio of instruments caused by 4.2.1. Market-risk management framework
adverse movements in market variables such as interest rates, The Bank’s Market Risk Management Framework consists of
foreign exchange rates, equity prices, volatility, spreads etc. Governance, Identification & Measurement, Management & Limit
Setting as well as Reporting/ Management information.
The Group identifies market risk inherent in its financial claims
and loans, FX exposure, trading and investment activities, and The Board of Directors (BoD) is ultimately responsible for
defines market risk management strategy through the following: determining and setting the amount of Market Risk that the Bank
is exposed to as a result of executing its business strategy through
• Implementation of Market Risk Management Framework Bank’s Risk Appetite. The market risk management framework
• Well-defined processes and strong and effective controls governs the Group’s trading and non-trading related market risk
• Recognition of Market Risk as inherent to Bank’s Business activities. The General Manager of the Treasury Group and General
Model and Macro-Economic Environment.

NBK Annual Report 2024

Managers in Overseas locations are responsible for managing 4.2.2. Monitoring of non-trading market risk in the banking book
trading activities. The management of market risk inherent within The Group’s key non-trading market risk is the sensitivity of its net
the Group’s non-trading activities is the primary responsibility interest income to movements in interest rates.
of the Group Asset and Liability Executive Committee (ALEC),
supported by the regional Asset and Liability Committees. The interest rate risk in the “Banking Book” is managed through
amongst others a “re-pricing gap” limit structure which is
Group Asset and Liability Management (ALM) Unit is responsible supplemented by periodic analysis of scenarios (instantaneous
for supervising the management of Market Risk exposure. parallel shift of +/-5 bps and +/-10bps in the yield curve) to
All activities giving rise to market risk are conducted within a capture the sensitivity of the exposure to interest rate changes.
structure of approved credit and position limits. Group Market
Risk Management independently measures, monitors and reports The analysis of scenarios shows the impact in the banking book
on Bank’s market risk exposures. as follows:

Table 18 KD 000’s

+ 5bp -5bp +10bp -10bp

31 December 2024 2,866 (2,866) 5,732 (5,732)

31 December 2023 3,307 (3,307) 6,614 (6,614)

Included in the assumptions above are that interest rates move the Group level. Furthermore, the Group recognizes and mitigates
by the same percentage irrespective of maturity, that all positions the correlation of other risks and processes in its market risk
run to maturity and that no management corrective action is monitoring process.
taken to mitigate the impact of interest rate risk. In addition to
interest rate risk, the Group is also exposed to market risk as In addition to VaR, the Group uses a structure of foreign exchange
a result of changes in the “fair value” of its strategic equity and and interest rate limits to manage and control its market risk
investment positions held without any intention of liquidation. associated with trading activities. The Group’s market risk is also
assessed under stressed conditions using the same framework.
4.2.3. Monitoring of “market” risk from “trading” activities Computations are based on stressed historical data.
The Group’s Risk Management function independently monitors
the regional and global trading market risk exposure using Value-
at-Risk (“VaR”) methodology to derive quantitative measures 4.2.4 Equity price risk
specifically for market risk under normal market conditions. This Equity price risk is the risk that the fair values of equities will
enables the Group to apply a constant and uniform measure fluctuate as a result of changes in the level of equity indices or
across all its trading activities and facilitates comparisons of the value of individual shares. Equity price risk arises from the
market risk estimates, both over time and against daily trading change in fair values of equity investments. The Group manages
results. equity price risk through diversification of investments in terms of
geographic distribution and industry concentration.
The VaR is supplemented with stress-testing (a stressed VaR)
to quantify market risk under extreme stress scenarios based CBK has set a maximum limit of 50 per cent. of a bank’s
on observed historical worst-case and in-house developed Regulatory Capital for investment in funds and equities, excluding
scenarios. VaR computation allows for diversification benefits at in subsidiaries.

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2 Governance

The analysis of the Group’s total equity investment portfolio is as follows:

Table 19 KD 000’s

31 December 2024 31 December 2023

Total Equity Investment 75,115 75,754

Of which Quoted Investments (%) 54% 55%

Net gains or (loss) of FVPL classified instruments recognised in Profit & Loss Statement
during the period 993 3,219

Net gains or (loss) of FVOCI classified instruments recognized in Balance-sheet as

at period-end (2,093) (1,250)

Capital requirement of Equity investment portfolio categorized as:

Fair value through Other Comprehensive Income (FVOCI) 6,112 6,151

Fair value through P&L (FVPL) 5,159 6,078

All revaluation gains or losses during the year relating to equity 4.2.7. Counterparty Credit Risk
investments were recorded in the consolidated statement of The Group enters into financial instruments that are traded
financial position. For additional details of the accounting policies over the counter mainly for hedging purpose with various
related to the valuation of equity holdings, refer to notes 2.15 and counterparties. In most cases, industry-standard documentation
2.16 of the Group’s consolidated financial statements. is used which gives the Group the protection in situation where
the Group’s Counterparty is in default. The Group also enters
4.2.5 Currency Risk into Interest Rate Swaps, which are cleared on an exchange and
The Group is exposed to transactional foreign currency risk to the provide daily margin in the form of cash at the exchange.
extent that there is a mismatch between the currencies in which
transactions are denominated and the respective functional Counterparty Credit Exposure arises from the risk that
currency of the Group companies and ultimately upon translation counterparties are unable to meet their payment obligations
to the Base Currency of the Group. under certain financial contracts such as derivatives.

The currency exposures are monitored on a regular basis and The Group Risk Management function independently monitors
compared against approved risk appetite. counterparty credit risk exposures arising from its derivatives
transactions using the concept of Potential Future Exposure (PFE).
4.2.6 Managing Interest rate benchmark reform and The PFE is defined as the maximum expected credit exposures
associated risks over a specified horizon at a particular confidence level. As such,
the risk exposure is an upper bound of possible exposures at the
Overview selected confidence level and not the maximum risk exposure
A fundamental reform of major interest rate benchmarks was possible.
undertaken globally, including the replacement of some interbank
offered rates (IBORs) with alternative nearly risk-free rates In response to the various regulations, including the European
(referred to as ‘IBOR’ reform). Market Infrastructure Regulations (EMIR), the Bank has, with the
approval of the CBK, established NBK GDM (Caymans) Limited to
The key risks for the Group arising from the transition were deal in financial derivatives products, which allows the Bank to
Conduct risk, Pricing risk, Interest rate basis risk, Accounting, continue dealing with highly-rated counterparties on derivative
Litigation and Operational risk. transactions with netting arrangements in place and removes the
risk that the Bank may be required to post “margin” collateral on
The Group has completed its transition to alternate rates and no
risk on these accounts remains.

NBK Annual Report 2024

an asymmetric basis. The Bank has also set in place policies and 4.2.7.2 Policies for securing collateral and credit reserves
procedures to ensure compliance with EMIR regulations, i.e., to Credit risk from derivatives is mitigated where possible through
clear OTC derivatives through Central Counterparties (CCP). netting agreements whereby derivative assets and liabilities
with the same counterparty can be offset. The Group uses
Wrong-Way Risk (WWR) the ISDA master agreement as the preferred agreement for
WWR arises when there is an adverse (positive) correlation documenting OTC derivatives. To reduce its counterparty risk, the
between a client’s creditworthiness (probability of default) and Group selectively enters into ISDA Credit Support Annex (CSA)
the Group’s credit exposure to that client. collateral agreements. In line with these standards, the Group
generally accepts only cash as collateral. It also has policies and
NBK does not enter into derivatives whose valuations depend on procedures for reviewing the legal enforceability of credit support
the credit quality of the counterparty and hence wrong-way risk is documents in accordance with applicable rules. Credit risk is
not a factor of risk for the Bank. reduced through the process of daily margining with relevant
market-counterparties. Daily margining is performed in-house as
4.2.7.1 Assignment of credit limits for Counterparty Credit well as using collateral service agent. Daily valuations for qualified
Exposures derivatives are compared to those reported by the market-
Counterparty credit risk exposure arises from the risk that counterparties and any disagreements are directly resolved. The
counterparties are unable to meet their payment obligations Group uses an internal model to estimate PFE, which includes
under derivative contracts. The allocation of credit limits for the mitigating effects of netting and collateral in valuing over-the-
derivatives market counterparties is provided by the Bank’s counter contracts.
Institutional Banking Division taking into consideration
counterparty credit profile, historical financial performance, Additional collateral requirements due to credit rating downgrade
geographical location, legal jurisdiction and other relevant factors. The Group has no provisions in its agreements with market
The credit limits are reviewed on an annual basis and credit counterparties where a downgrade in its credit rating will have an
exposure is regularly monitored and reported for all derivatives’ impact on the collateral amount to be posted.
counterparties.

4.2.7.3 General Disclosure for Counterparty Credit Risk

Table 20 KD 000s

Derivative Contracts 31 December 2024 31 December 2023

Gross Positive fair value 309,043 290,685

Counterparty netting benefit (7,345) (20,150)

Netted current credit exposure 301,698 270,535

Cash collateral (held by NBK) 286,662 247,132

Net exposure (after netting and collateral) 15,035 23,403

4.2.7.4 Exposure-at-Default Methodology using the Potential Future Exposure (PFE) measure. The Bank
As per the regulatory requirements, the Bank calculates applies ‘historical’ simulation approach (at 99% confidence
counterparty credit exposure as per the Current Exposure Method level) by projecting the potential values of relevant risk factors
(CEM) for its exposure to derivatives counterparties. across the transactions’ horizon, and then re-valuing derivatives
transactions and counterparty credit exposures according to the
In addition, the Bank calculates counterparty credit exposure projected risk factor.

95
2 Governance

Both the CEM and PFE methods incorporate the effects of legally enforceable netting and collateral agreements when estimating
counterparty exposure.

Table 21 KD 000s

31 December 2024 31 December 2023

Counterparty Credit Risk (CEM method) for derivatives’ counterparties 114,175 152,255

Counterparty Credit Risk (PFE method) for derivatives’ counterparties 334,105 354,028

4.2.8 Notional value of credit derivatives transactions developed with the business units in line with the Group’s risk
NBK has no exposure to credit derivatives. appetite. The capture and reporting of operational risk incidents
and losses are established as a firm process across all business
4.3 Operational risk and support units. Close co-ordination with business units and
Operational risks are governed at Group level through a Board- the GIA enables ORM to track operational incidents and losses
approved Group Operational Risk Management policy and and to propose mitigating actions for business units to follow to
framework which defines the roles and responsibilities of the address control weaknesses.
Board & BRCC, the EC, Business and Operational Teams, Group
Operational & Technology Risk Management function [ORM] and In addition, a comprehensive Business Continuity, Crisis
the Group Internal Audit function [GIA] for managing, monitoring Management and Disaster Recovery management program
and reporting operational risks. The key components of the designed to cope with business disruptions and major disasters
Board-approved framework are: has been implemented and is regularly tested.

• comprehensive, documented policies, procedures and Material Operational risks are periodically reviewed with relevant
controls which reflect CBK and Basel III guidelines for internal members of Executive Management and reported to the EC and
controls and sound practices for managing and supervising BRCC to ensure comprehensive oversight.
operational risks in banks;
• risk and control self-assessments conducted by business line 4.4 Liquidity risk
management in coordination with and supported by ORM; Liquidity risk is defined as the inability to generate sufficient
• quarterly key risk indicator submission and validation to financial resources to meet all obligations and commitments as
identify risk trends and develop mitigating actions; they fall due, or the ability only to secure them at excessive cost.
• operational incident, loss reporting and investigation of It is the policy of the Group to maintain adequate liquidity at all
causes and failed controls; times, in all geographical locations.

ORM has implemented an Integrated Risk Management system The Group’s liquidity management is guided by its internal
that facilitates the maintenance of a comprehensive Risk Register, liquidity policy, which is reviewed annually and approved by the
approval framework for plans to deal with residual risk treatment Board. The EC assigns responsibilities and ensures the Group
plans, reporting of risk indicators and operational incidents and has sufficient resources to carry out liquidity risk management
maintenance of business continuity impact assessments and work in an independent and effective manner. The primary
plans. responsibilities for the management of liquidity are with the ALEC,
regional asset and liability committees, the Group Treasurer and
ORM works closely with all the Group’s business lines to raise local Treasurers. Day-to-day cash-flows and liquidity management
awareness of operational risk. In addition to the risk opinions and are handled by the ‘local’ treasury teams at Group Head Office
constant support provided by the operational risk management and the Group’s international locations. The longer-term liquidity
function through daily activities, operational risk awareness is and funding profile of the Group is monitored and managed by
achieved through a comprehensive training program developed Group Treasury under the guidance of the ALEC.
and delivered by the operational risk management function to
the various business units. The aim of this training program is to The Group’s liquidity policy specifies the main goals, roles
cultivate strategic relationships with business line management and responsibilities, processes and procedures for managing
and to encourage open communication and ownership of risk the Group’s liquidity risk. It also encompasses the Group’s
issues. contingency funding plan, which is intended to provide a
framework for effective responses to any potential liquidity
Risk and control self-assessments are regularly conducted by crisis, whether triggered by Bank-specific or by systemic liquidity
the Business and Operational teams to identify the residual shortages.
risks, control gaps and take relevant risk treatment measures in
consultation with ORM. The Bank’s liquidity risk strategy is centered on always
maintaining an adequate liquidity position, primarily by means of
Key risks across business and support units are identified and an acceptable maturity mismatch profile, relying on more ‘stable’
monitored on a quarterly basis using various key risk indicators deposits and maintaining an adequate stock of High-Quality

NBK Annual Report 2024

Liquid Assets (HQLAs) at all times. Further, the Bank’s liquidity 4.5 Reputation and fiduciary risk
objectives are: Reputation risk is defined as the current and prospective impact
on earnings and capital arising from negative public opinion which
• to ensure strategies are in conformity with the regulatory will affect the ability to establish new relationships or services or
requirements of the CBK and the requirements of the local to continue servicing existing relationships.
regulators in other jurisdictions where the Group operates;
• to ensure the use of proper tools in ascertaining liquidity risk; Management of reputation risk is an inherent feature of the
• continuously to seek sources of stable customer funds and Group’s corporate culture which is embedded as an integral
to keep its funding costs as low as possible; part of the internal control systems. Besides identification
• to limit its dependence on the use of short-term inter-bank and management of risks, the internal control system also
funding; incorporates as an ethos the maintenance of business practices
• to leverage its strong position, reputation and credit strength of the highest quality towards its customers, shareholders,
in order to secure long-term funding, such as customer regulators, general public and fiduciary and non-fiduciary clients.
deposits, institutional deposits, government deposits and
debt issuance at a competitive cost; Through its policies and practices, NBK ensures proper
• to ensure the Bank’s ability to generate or obtain cash or its screening of clients’ risk profiles and performance expectations
equivalent in a timely and cost-efficient manner so that the is conducted prior to making investment products or services
Bank can meet its obligations; available to them. Furthermore, once a product or service is
• to maintain market confidence; and sold, appropriate risk and performance projections are clearly
• to ensure profitable business opportunities can be pursued communicated, and funds placed under management are treated
without liquidating assets at undesirable times or raising with due care and professionalism.
additional unsecured funding on an unreasonable scale or
timescale. During the year, Assets under Management at the Group
increased by 16.2 % (2023: 16 %) to reach KD 7,654 million on 31
The liquidity and funding management process includes: December 2024 (2023: KD 6,600 million).

• self-imposed and regulatory liquidity ratios, including ratios

in accordance with Basel III principles;
• maintaining a diverse range of funding sources with adequate
back-up facilities; III Composition of Capital
• monitoring depositor concentration to avoid undue reliance
on individual large depositors and ensure a satisfactory
overall funding mix; and 1. Composition of Regulatory Capital
• liquidity stress tests to make sure the Group can survive
liquidity squeezes under different stress scenarios. For regulatory purposes, the capital base is divided into:
i. Common Equity Tier 1
The Bank monitors and reports various internal and regulatory ii. Tier 1 Capital
liquidity metrics to manage and comply with liquidity risk on iii. Tier 2 Capital
an on-going basis. Specifically, since 1st Jan 2016, the Bank is
monitoring and reporting Liquidity Coverage Ratio (LCR) in line Common Equity Tier 1 Capital comprises shareholders’ equity,
with CBK instructions. Refer to the Liquidity Coverage Ratio retained earnings, eligible reserves and related eligible non-
disclosures available on the Bank’s website of the Bank for controlling interests. The book values of Goodwill and Intangibles
Governance framework, Funding Strategy and LCR ratio results are deducted along with other regulatory adjustments.
and analysis.
Tier 1 Capital consists of Common Equity Tier 1 Capital and
In accordance with the Basel III framework, as implemented by Additional Tier 1 Capital which includes eligible portions of non-
the CBK, the Group also manages its liquidity through compliance controlling interests.
with the Net Stable Funding Ratio (NSFR). Starting from 1 January
2018, the Bank has been monitoring and reporting its NSFR in Total Regulatory Capital includes Tier 1 Capital and Tier 2 Capital
line with CBK instructions. Refer to the NSFR related disclosures which consists of the allowed portions of general provisions and
available on the Bank’s website on a quarterly basis. certain additional eligible non-controlling interests.

97
2 Governance

The below table summarises the composition of capital and ratios:

Table 22 KD 000’s

31 December 2024 31 December 2023

Common Equity Tier 1 capital 3,639,713 3,442,577

Tier 1 capital 4,173,934 3,974,353

Total capital 4,785,699 4,572,242

Total risk-weighted assets 27,601,723 26,469,664

Capital ratios and buffers

Common Equity Tier 1 (as percentage of risk-weighted assets) 13.2% 13.0%

Tier 1 (as percentage of risk-weighted assets) 15.1% 15.0%

Total capital (as percentage of risk-weighted assets) 17.3% 17.3%

National minima

Common Equity Tier 1 minimum ratio including Capital Conservation Buffer* 9.5% 9.5%

Tier 1 minimum ratio 11.0% 11.0%

Total capital minimum ratio excluding Countercyclical and D-SIB buffers 13.0% 13.0%

NBK Group minima

Common Equity Tier 1 minimum ratio including Capital Conservation Buffer and
Domestic Systemically-Important Bank Buffer* 11.5% 11.5%

Tier 1 minimum ratio 13.0% 13.0%

Total capital minimum ratio excluding Countercyclical Buffer 15.0% 15.0%

A detailed breakdown of the Group’s Regulatory Capital position the balance sheet in the audited financial statements, a three-
under the Common Disclosures templates as stipulated under the step approach has been mandated under the Pillar 3 disclosures
Pillar 3 section of the CBK Basel III Capital Adequacy framework section of the CBK Basel III framework.
is presented in Table 31 available in the Appendices Section.
Table 23 provides the comparison (Step1) of the balance sheet
2. Reconciliation requirements published in the consolidated financial statement and the
The basis for the scope of consolidation for accounting and balance sheet under the regulatory scope of consolidation. Lines
regulatory purposes is consistent for the Group. In order to have been expanded and referenced with letters (Step 2) to
provide a full reconciliation of all Regulatory Capital elements to display the relevant items of the Regulatory Capital.

NBK Annual Report 2024

Table 23: Steps 1 and 2 of Reconciliation requirements KD 000s

Balance sheet as in Under regulatory

Item published financial scope of Reference
statements consolidation

31-Dec-24 31-Dec-24

Assets

Cash and short-term funds 5,323,273 5,323,273

Central Bank of Kuwait bonds 343,652 343,652

Kuwait Government treasury bonds 148,555 148,555

Deposits with banks 1,383,330 1,383,330

Loans, advances and Islamic financing to customers 23,707,609 23,707,609

of which General Provisions(netted above) capped for

316,890 316,890
Tier 2 inclusion a

Investment securities 7,626,478 7,626,478

Land, premises and equipment 517,392 517,392

Goodwill and other intangible assets 510,733 510,733

of which goodwill deducted from CET1 Capital 341,146 341,146 b

of which other intangibles deducted from CET1 Capital 169,587 169,587 c

Other assets 777,134 777,134

Total assets 40,338,156 40,338,156

Liabilities

Due to banks and other financial institutions 8,353,558 8,353,558

Customers deposits 22,866,205 22,866,205

Certificates of deposit issued 1,501,457 1,501,457

Other borrowed funds 1,520,422 1,520,422

Amount recognized in Tier 2 capital 242,279 242,279 d

Other liabilities 939,782 939,782

Total liabilities 35,181,424 35,181,424

99
2 Governance

Table 23: Steps 1 and 2 of Reconciliation requirements (continued) KD 000s

Balance sheet as in Under regulatory

Item published financial scope of Reference
statements consolidation

31-Dec-24 31-Dec-24

Shareholders’ Equity

Share capital 832,644 832,644 e

Proposed bonus shares 41,633 41,633 p

Statutory reserve 416,324 416,324 f

Share premium account 803,028 803,028 g

Treasury shares - -

Treasury shares reserve 34,961 34,961 h

Other Reserves 1,983,738 1,983,738

of which Retained Earnings eligible as CET1 Capital 1,975,750 1,975,750 i

of which Proposed Dividend 208,161 208,161

of which Others eligible as CET1 Capital (200,173) (200,173) k

Equity attributable to shareholders of the Bank 4,112,328 4,112,328

Perpetual Tier 1 Capital Securities 439,032 439,032

of which used for Regulatory Capital 439,032 439,032 l

Non-controlling interests 605,372 605,372

of which Limited Recognition eligible as CET1 Capital 246,279 246,279 m

of which Limited Recognition eligible as AT1 Capital 95,189 95,189 n

of which Limited Recognition eligible as Tier 2 Capital 52,596 52,596 o

Total equity 5,156,732 5,156,732

Total liabilities and equity 40,338,156 40,338,156

NBK Annual Report 2024

Table 24 provides the relevant lines under ‘Table 31: Composition of Regulatory Capital’ with cross references to the letters in Table 23,
thereby reconciling (Step 3) the components of Regulatory Capital to the published balance sheet.

Table 24: Step 3 of Reconciliation requirements KD 000s

Relevant
Row Number Source based on
in Common reference letters
Disclosure Component of of the balance
Template Common Equity Tier 1 capital: instruments and reserves Regulatory Capital sheet from step 2

1 Directly issued qualifying common share capital plus related stock surplus 832,644 e

2 Retained earnings 1,975,750 i

3 Accumulated other comprehensive income (and other reserves) 1,095,773 f+g+h+k+j+p

Common share capital issued by subsidiaries and held by third parties

5 (minority interest) 246,279 m

6 Common Equity Tier 1 capital before regulatory adjustments 4,150,446

Common Equity Tier 1 capital : regulatory adjustments

8 Goodwill (341,146) b

Other intangibles other than mortgage-servicing rights (net of related tax

9 liability) (169,587) c

Investments in own shares (if not already netted off paid-in capital on
16 reported balance sheet)

28 Total regulatory adjustments to Common Equity Tier 1 (510,733)

29 Common Equity Tier 1 capital (CET1) 3,639,713

Additional Tier 1 capital : instruments

Directly issued qualifying Additional Tier 1 instruments plus related stock

30 surplus 439,032 l

31 of which: classified as equity under applicable accounting standards 439,032

Additional Tier 1 instruments (and CET1 instruments not included in row 5)

issued by subsidiaries and held by third parties (amount allowed in group
34 AT1) 95,189 n

36 Additional Tier 1 capital before regulatory adjustments 534,221

Additional Tier 1 capital : regulatory adjustments

44 Additional Tier 1 capital (AT1) 534,221

45 Tier 1 capital (T1 = CET1 + AT1) 4,173,934

Tier 2 capital : instruments and provisions

46 Directly issued qualifying Tier 2 instruments plus related stock surplus 242,279 d

Tier 2 instruments (and CET1 and AT1 instruments not included in rows 5
or 34) issued by subsidiaries and held by third parties (amount allowed in
48 group Tier 2) 52,596 o

50 General Provisions included in Tier 2 Capital 316,890 a

51 Tier 2 capital before regulatory adjustments 611,765

Tier 2 capital: regulatory adjustments

58 Tier 2 capital (T2) 611,765

59 Total capital (TC = T1 + T2) 4,785,699

101
2 Governance

The Leverage Ratio is a separate, additional requirement from

IV. Leverage the risk-based capital requirement. It is defined as the ‘capital’
measure divided by the ‘exposure’ measure. The capital measure
1. Leverage Ratio
is made up of Tier 1 capital. The exposure measure is a sum of
on-balance sheet assets, derivative exposure, securities finance
In October 2015, CBK issued the regulations on the ‘Leverage
transactions and off-balance sheet exposures.
Ratio’ introduced by the Basel Committee as part of the
regulatory reforms package. This transparent and non-risk
The Group is in compliance with the requirements stipulated by
based metric supplements the Capital ratio to act as a backstop
CBK for the Leverage Ratio set at a minimum of 3%.
measure to limit excessive build-up of on- and off-balance sheet
exposures.
The Leverage Ratio for the Group at consolidated level is:

Table 25

31 December 2024 31 December 2023

Tier 1 Capital (KD 000s) 4,173,934 3,974,353

Total Exposures (KD 000s) 44,052,478 40,989,808

Leverage Ratio 9.5% 9.7%

2. Leverage Ratio Exposures

The below Table provides the details of the Total Exposures for Leverage Ratio:

Table 26 KD 000’s

Total Exposures 31 December 2024 31 December 2023

On-balance sheet exposures 39,827,423 37,156,575

Derivative exposures 300,679 382,864

Off-balance sheet items 3,924,376 3,450,369

Total exposures 44,052,478 40,989,808

Table 32 in Appendices Section provides details of the Leverage Ratio

in the format stipulated for public disclosure under the Pillar 3 framework.

3. Reconciliation

Table 27 provides the reconciliation of the balance sheet assets

from the published financial statement with total exposure
amount in the calculation of the Leverage Ratio.

NBK Annual Report 2024

Summary comparison of accounting assets vs Leverage Ratio exposure measure

Table 27 KD 000’s

Item 31 December 2024 31 December 2023

1 Total consolidated assets as per published financial statements 40,338,156 37,664,991

Adjustment for investments in banking, financial, insurance or commercial
entities that are consolidated for accounting purposes but outside the scope
2 of regulatory consolidation -
Adjustment for fiduciary assets recognized on the balance sheet pursuant to
the operative accounting framework but excluded from the Leverage Ratio
3 exposure measure -
4 Adjustments for derivative financial instruments 300,679 382,864
Adjustment for securities financing transactions (i.e. repos and similar
5 secured lending)
Adjustment for off-balance sheet items (i.e. conversion to credit equivalent
6 amounts of off-balance sheet exposures) 3,924,376 3,450,369
7 Other adjustments (510,733) (508,416)
8 Leverage Ratio exposure 44,052,478 40,989,808

c. Evaluate the sufficiency and effectiveness of the Remuneration

V. Remuneration Disclosures Policy on a periodic basis to ensure the achievement of its declared
objectives.
Qualitative Information
d. Ensure that Independent Board members will not be paid any salary
or financial amount, with the exception of the remuneration paid
1. Board of Directors, Board Nomination and
to them for their membership in the Board, or the dividend paid
Remuneration Committee
to them as a shareholder, or the interests received or due on their
NBK Group’s remuneration framework is under the supervision of
deposits or investments from the ordinary business activities of the
the Board of Directors. As per the Group’s policies and charters,
Bank.
the Board is responsible to review and approve the Remuneration
e. Make recommendations to the Board regarding the level and
Policy and oversee the implementation of the remuneration
components of the remuneration of the Group CEO and his
framework.
deputies, taking into consideration the total remuneration including
salaries, bonuses and other incentives.
The Board Nomination and Remuneration Committee (BNRC)
f. Give recommendations to the Board regarding the nomination for
comprises four members (3 Non-Executive Board members and
Board membership pursuant to the approved policies and in line
1 Independent Board member). The committee is chaired by the
with the CBK’s instructions setting out nomination rules for Board
Independent Board member.
membership.
g. Ensure that all provisions and requirements related to the
The main objective of the Committee is to carry out the
independence of Independent Board members are fulfilled and
nomination and remuneration responsibilities. In terms of
satisfied by new candidates to Board membership and raise
remuneration mandates, the Committee supports the Board
recommendations to the Board in this regard.
in setting up the Group’s remuneration framework and ensures
h. Assess the skills and competencies required to fulfil the Board’s
effective implementation in accordance with the Group’s
duties, specifically to the issues related to the strategic objectives
Remuneration Policy and Corporate Governance Code.
of the Group.
i. Ensure Board’s composition satisfy diversification requirements
The key responsibilities of the Committee are summarised below:
in terms of skills, capabilities, competencies, experience, culture,
gender and age.
a. Develop the Remuneration Policy in co-ordination with Executive
j. Identify Board members qualified to fill vacancies on any
Management and Group Human Resources and submit the same to
Committee of the Board and recommend to the Board the
the Board for approval. The Board is responsible for monitoring the
appointment of the identified person(s) to the relevant committee.
implementation of the policy.
k. Ensure the alignment of environmental and social goals to executive
b. Review the Remuneration Policy in co-ordination with Group Risk
pay and align executives to the long-term focus of the organization.
Management at least on an annual basis or at the request of the
Board and provide the Board with policy amendments or update
During the year 2024 the Committee reviewed and updated the
suggestions.
Remuneration Policy, Succession Planning Manual and its internal
Charter.

103
2 Governance

2. Remuneration Policy Third Category: Risk management and Control Functions

NBK Group Remuneration Policy is developed and implemented This category includes the following functional heads, and their
at the Group level and covers NBK subsidiaries and foreign deputies.
branches.
• Group Financial Control
NBK Group has a clear Remuneration Policy, instructions and
• Group Risk Management
processes, ensuring a sound remuneration framework throughout
• Group Compliance & Governance
the organisation. It supports the Group’s ability to recruit and
• Group Internal Audit
retain the right talents and competences and motivate high-
• Anti-Money Laundering Unit
calibre, skilled and knowledgeable employees, thereby ensuring The number of persons in this category as of 31 December 2024
sound risk management and sustained profitability. is 20 (2023:19).
The Policy aims to support the Group to operate a “total reward”
philosophy taking account of all components of financial 3. Remuneration Structure and Components
remuneration. The Group’s financial remuneration framework has been
linked with long-term and short-term performance objectives.
The Board-approved Group Strategy is transformed into Key
Group Policy aims to reward success, not failure, and attempts to
Performance Indicators (KPIs) and remuneration is determined
align employees’ remuneration with its risk framework and risk based on the achievement of those KPIs towards the overall
appetite and is designed to reward competitively the achievement Group strategy [including financial and non-financial criteria and
of long-term sustainable performance, attract and motivate Key Risk Indicators (KRIs), as appropriate].
the very best persons who are committed to a long-term career
with the Bank, and who will perform their role in the long-term The Group has two main remuneration components:
interests of its shareholders.
• Fixed remuneration:
In case any provisions of the Remuneration Policy document The purpose of the fixed pay is to attract and retain employees by
deviate from any of the local statutory or regulatory requirements, paying market-competitive remuneration for the role, skills and
the local statutory and regulatory requirements will take experience required for the business.
precedence over the provisions of the Remuneration Policy.
The Remuneration Policy defines three major categories for Fixed remuneration includes:
remuneration treatment, governance and disclosures.
1. Salaries
2. Benefits
First Category: Senior Management 3. Other cash allowances
This category includes all employees at the level of Deputy
General Manager (DGM) and higher (excluding risk management These payments are fixed and do not vary with performance.
and control functions).
• Variable Remuneration (performance-based remuneration):
The number of persons in this category as of 31 December 2024
The purpose of the variable remuneration is to drive and reward
is 47 (2023: 44).
performance based on annual financial and non-financial measures
consistent with shareholder interests and adherence to NBK values.
Second Category: Material Risk-Takers Variable remuneration includes:
This category includes the Group CEO, his deputy, CEO Kuwait, his
deputy and the heads of business functions and their deputies 1. Cash bonus.
(Deputy General Manager and higher are included in Senior 2. Deferred Cash Bonus
3. Equity shares as per Phantom Shares Plan*
Management category). The Group’s core business units are:
4. Other

• Global Wealth Management These payments are not fixed and are linked to performance.
• Corporate Banking Group
• Treasury Group The “other” remuneration represents performance incentives for
• Consumer Banking Group certain business units upon achieving certain stated business
• Private Banking Group targets.
• Foreign Corporate and Trade Finance Banking The Group ensures there is a prudent balance between fixed
• International Banking Group and variable remuneration to allow for the possibility of reducing
remuneration, in cases of adverse financial performance.
The number of persons in this category as of 31 December 2024
is 45 (2023: 47). The Cash Bonus, Deferred Cash Bonus and Phantom Shares
Plan components of the variable remuneration pool are availed
selectively to certain Eligible Employees.

* Phantom Shares: are notional shares which are neither issued shares nor part of
the Bank’s Capital. The Phantom Shares cannot be sold or circulated. Its value shall
be equal to the sale price of the Bank’s shares in the Stock Exchange on a certain
date, and according to which the Cash Remuneration for Eligible Employees shall be
calculated according to this Plan.

NBK Annual Report 2024

In case of high-risk exposures, the Group would try to minimise The KPIs for the risk management and control functions are
the percentage of variable remuneration, especially for the Senior based on the objectives of the control function itself. They form
Management and Material Risk-Takers. an objective base distinct from the business performance base.
The performance appraisal form for each position identifies the
quantitative weights of individual KPIs; the final scoring of the
4. Risk-Based Remuneration Approach
appraisal is linked with a quantitative formula to determine fixed
NBK considers its Group risk profile when determining its annual
remuneration (salary increments) and variable remuneration
remuneration pool; the risk profile includes the key risks to which
(annual bonus).
the Group is exposed, such as strategic, credit, market, liquidity,
and operation risk. The policy ensures adequate linkage between
Since the overall remuneration pool of the Group is linked to
the performance and risk materialisation, loss incurrence and risk
Group performance (Group Net Profit), the Group adjusts the
appetite of the Group.
remuneration percentages in case of weak performance and
business recessions.
The overall variable remuneration pool is determined using a
multi-year performance assessment which takes account of
6. Remuneration Adjustments
relevant risk metrics. The metrics used to determine the pool
The annual remuneration amount (fixed and variable) is reviewed by
are linked with performance and key risk indicators; the key risk
the Board Nomination and Remuneration Committee and is then
indicators are designed and customised for each core business
subject to review and approval by the Board of Directors.
function, and they are in line with the Group’s overall risk strategy.
The Group remuneration deferment policy ensures an appropriate
During the year key risk indicators (KRIs) remain linked to the
portion of the variable remuneration of senior employees (including
overall remuneration pool without significant change from last
those deemed to have a material impact on the risk profile of the
year’s KRIs.
organisation) is deferred. The deferment of variable remuneration
applies to the Deferred Cash Bonus and Phantom Shares Plan.
The Group Risk Management and Group Compliance and
Governance functions are independent and report to the
The Group applies a deferment approach of up to three years and
Board Risk and Compliance Committee. The Heads of Group
final vesting of these variable components is subject to continuing
Risk Management and Group Compliance and Governance are
employment and the absence of risk materialisation. Claw-back
assessed by the Board Risk and Compliance Committee on an
applies on the non-vested portions in case risk materialises. The
annual basis. The total remuneration for each of these positions
claw-back mechanism is applicable on the Deferred Cash Bonus
is determined and approved by the Board Risk and Compliance
and Phantom Shares Plan.
Committee as a fully independent party.
This deferred variable remuneration is governed as follows:
5. An Overview on the Key Performance Indicators
The overall strategy of the Group is set and approved by the
• Deferred over a period of three (3) years to align with the
Board and translated into KPIs. These are then documented and
long-term performance of the Group.
communicated to ensure the alignment of management activities
• Subject to Clawback in the event of established fraud,
to the strategy applied by Senior Management. These KPIs are
misleading information or exceeding the approved risk limits.
monitored and reported to the Board on a regular basis.
Control Functions personnel are subject to Clawback for 1 year
Examples of Group-level KPIs:
and other positions are subject to Clawback for three (3) years.

• Return on Assets
Quantitative Information
• Return on Equity
1. During the year, the Board Nomination and Remuneration
• Cost-income ratio
Committee met four times. Board of Directors members
• Capital Adequacy
(Executive Board member, Non-Executive Board members
• Capital Adequacy Ratio
and the Independent Board members) received remuneration
• Non-performing Assets (NPA)
amounting to KD 70 thousand each (total of KD 770
thousand) for their services as Board members. Board
Remuneration is determined based on the achievement of KPIs
of Directors’ remuneration is subject to the approval of
towards the overall Group strategy. These include financial and
shareholders at the Annual General Meeting.
non-financial criteria and Key Risk Indicators (KRIs) at Group level.
2. The number of persons (Senior Management and Material
The annual remuneration pool for this year was approved by the
Risk-Takers) eligible for variable remuneration is 67 persons
Board of Directors after review and discussion with the Board
and they represent 2.92% of the overall NBK total staff
Nomination and Remuneration Committee. The percentage
number eligible for variable remuneration for 2024
approved for remuneration was determined based on the Group-
3. The total number of persons (Senior Management and
level KPIs mentioned above.
Material Risk-Takers) is 67 persons. Their total remuneration
for 2024 is KD 25,900 thousand.
Remuneration parameters for core units (revenue-generating
4. The number of employees who received sign-on awards
functions) are determined based on the stated KPIs into which
during the year is Nil.
risk limits are cascaded. Remuneration for other business units,
5. The total amount of end-of-service benefit paid during 2024
such as support functions (excluding risk and control functions),
is KD 529 thousand, this is related to 4 person (Senior
is based only on stated KPIs.
Management and Material Risk-Takers).

105
2 Governance

Senior Management:

Table 28
Total salaries & remuneration granted during reported period Unrestricted Deferred
(KD 000s) (KD 000s)

Fixed remuneration:

- Cash 7,423 Nil

Variable remuneration:

- Cash 13,290 Nil

- Phantom Shares Nil 2,149

- Others (Note 1) 354 Nil

Material Risk-Takers:

Table 29
Total salaries & remuneration granted during reported period Unrestricted Deferred
(KD 000s) (KD 000s)

Fixed remuneration:

- Cash 6,634 Nil

Variable remuneration:

- Cash 12,199

- Phantom Shares Nil 1,841

- Others (Note 1) 866 Nil

NBK Annual Report 2024

Financial and Risk Control:

Table 30
Total salaries & remuneration granted during reported period Unrestricted Deferred
(KD 000s) (KD 000s)

Fixed remuneration:

- Cash 1,792 Nil

Variable remuneration:

- Cash 1,201 9

- Phantom Shares Nil 524

- Others (Note 1) Nil Nil

Note 1: This consists of other performance incentives

Total remuneration paid as per employee categories

Table 31
Grand Total Remuneration
Number of employees in Fixed and Variable granted
Employees Category
this category during the reported period
(KD 000s)

Senior Management 47 23,216

Material Risk-Takers 45 21,540

Financial and Risk Control 20 3,526

107
2 Governance

VI. Appendices
1. Regulatory Capital Composition: Common Disclosure Template

Table 32
Row Number KD 000s

Common Equity Tier 1 capital: instruments and reserves

1 Directly issued qualifying common share capital plus related stock surplus 832,644

2 Retained earnings 1,975,750

3 Accumulated other comprehensive income (and other reserves) 1,095,773

Directly issued capital subject to phase out from CET1 (only applicable to non-joint stock
4
companies) -

5 Common share capital issued by subsidiaries and held by third parties (minority interest) 246,279

6 Common Equity Tier 1 capital before regulatory adjustments 4,150,446

Common Equity Tier 1 capital : regulatory adjustments

7 Prudential valuation adjustments

8 Goodwill (net of related tax liability) (341,146)

9 Other intangibles other than mortgage-servicing rights (net of related tax liability) (169,587)

Deferred tax assets that rely on future profitability excluding those arising from temporary
10
differences (net of related tax liability) -

11 Cash flow hedge reserve -

12 Shortfall of provisions to expected losses (based on the Internal Models Approach, if applied) -

13 Securitisation gain on sale -

14 Gains and losses due to changes in own credit risk on fair valued liabilities -

15 Defined benefit pension fund net assets -

16 Investments in own shares (if not already netted off paid-in capital on reported balance sheet) -

17 Reciprocal cross holdings in common equity of banks, Fis, and insurance entities -

Investments in the capital of banking, financial and insurance entities that are outside the scope of
18
regulatory consolidation, net of eligible short positions (amount above 10% threshold) -

Significant investments in the common stock of banking, financial and insurance entities that are
outside the scope of regulatory consolidation, net of eligible short positions, where the bank does
19
not own more than 10% of the issued share capital(amount above 10% threshold of bank's CET1
capital) -

20 Mortgage servicing rights (amount above 10% threshold of bank's CET1 capital) -

Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related
21
tax liability) -

22 Amount exceeding the 15% threshold -

23 of which: significant investments in the common stock of financials -

24 of which: mortgage servicing rights -

25 of which: deferred tax assets arising from temporary differences -

26 National specific regulatory adjustments

NBK Annual Report 2024

Row Number KD 000s

Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and
27
Tier 2 to cover deductions -

28 Total regulatory adjustments to Common Equity Tier 1 (510,733)

29 Common Equity Tier 1 capital (CET1) 3,639,713

Additional Tier 1 capital : instruments

30 Directly issued qualifying Additional Tier 1 instruments plus related stock surplus 439,032

31 of which: classified as equity under applicable accounting standards 439,032

32 of which: classified as liabilities under applicable accounting standards -

33 Directly issued capital instruments subject to phase out from Additional Tier 1 -

Additional Tier 1 instruments (and CET1 instruments not included in row 5) issued by subsidiaries
34
and held by third parties (amount allowed in group AT1) 95,189

35 of which: instruments issued by subsidiaries subject to phase out -

36 Additional Tier 1 capital before regulatory adjustments 534,221

Additional Tier 1 capital : regulatory adjustments

37 Investments in own Additional Tier 1 instruments -

38 Reciprocal cross holdings in Additional Tier 1 instruments -

Investments in the capital of banking, financial and insurance entities that are outside the scope
39 of regulatory consolidation, net of eligible short positions, where the bank does not own more than
10% of the issued common share capital of the entity(amount above 10% threshold) -

Significant investments in the capital of banking, financial and insurance entities that are outside the
40
scope of regulatory consolidation(net of eligible short positions) -

41 National specific regulatory adjustments -

42 Regulatory adjustments applied to Additional Tier 1 due to insufficient Tier 2 to cover deductions -

43 Total regulatory adjustments to Additional Tier 1 capital -

44 Additional Tier 1 capital (AT1) 534,221

45 Tier 1 capital (T1 = CET1 + AT1) 4,173,934

Tier 2 capital : instruments and provisions

46 Directly issued qualifying Tier 2 instruments plus related stock surplus 242,279

47 Directly issued capital instruments subject to phase out from Tier 2

Tier 2 instruments (and CET1 and AT1 instruments not included in rows 5 or 34) issued by
48
subsidiaries and held by third parties (amount allowed in group Tier 2) 52,596

49 of which: instruments issued by subsidiaries subject to phase out -

50 General Provisions included in Tier 2 Capital 316,890

51 Tier 2 capital before regulatory adjustments 611,765

Tier 2 capital: regulatory adjustments

52 Investments in own Tier 2 instruments -

53 Reciprocal cross holdings in Tier 2 instruments -

Investments in the capital of banking, financial and insurance entities that are outside the scope
54 of regulatory consolidation, net of eligible short positions, where the bank does not own more than
10% of the issued common share capital of the entity(amount above 10% threshold) -

Significant investments in the capital of banking, financial and insurance entities that are outside the
55
scope of regulatory consolidation, net of eligible short positions -

109
2 Governance

Row Number KD 000s

56 National specific regulatory adjustments

57 Total regulatory adjustments to Tier 2 capital

58 Tier 2 capital (T2) 611,765

59 Total capital (TC = T1 + T2) 4,785,699

60 Total risk-weighted assets 27,601,723

Capital ratios and buffers

61 Common Equity Tier 1 (as percentage of risk-weighted assets) 13.2%

62 Tier 1 (as percentage of risk-weighted assets) 15.1%

63 Total capital (as percentage of risk-weighted assets) 17.3%

Institution specific buffer requirement (minimum CET1 requirement plus (a)capital conservation
64 buffer plus (b)countercyclical buffer requirements plus (c)DSIB buffer requirement expressed as a
percentage of risk-weighted assets) 9.0%

65 of which: (a) capital conservation buffer requirement

66 of which: (b) bank specific countercyclical buffer requirement -

67 of which: (c) DSIB buffer requirement 2.0%

68 Common Equity Tier 1 available to meet buffers (as percentage of risk-weighted assets) 3.7%

National minima

69 Common Equity Tier 1 minimum ratio including Capital Conservation Buffer 9.5%

70 Tier 1 minimum ratio 11.0%

71 Total capital minimum ratio excluding Counter-cyclical and D-SIB buffers 13.0%

Amounts below the thresholds for deduction(before risk weighting)

72 Non-significant investments in the capital of other financials 32,207

73 Significant investments in the common stock of financial entities 901

74 Mortgage servicing rights (net of related tax liability) -

75 Deferred tax assets arising from temporary differences (net of related tax liability) -

Applicable caps on the inclusion of provisions in Tier 2

Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardised approach
76
(prior to application of cap) 710,635

77 Cap on inclusion of allowances in Tier 2 under standardised approach 316,890

Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings- based
78
approach (prior to application of cap)

79 Cap on inclusion of allowances in Tier 2 under internal ratings-based approach

NBK Annual Report 2024

2. Regulatory Capital: Main Features Template

The Bank’s share capital as at 31 December 2024 comprised issued and fully-paid-up equity shares (note 19 of the Group’s
consolidated financial statements), and is eligible as Common Equity Tier 1 Capital at Group and Solo level.

In addition, the following instruments qualify as eligible Regulatory Capital

1 Issuer NBK Tier 1 Limited NBK Tier 1 Financing (2) National Bank of Kuwait NBK Tier 2 Limited
Limited S.A.K.P.
2 Unique identifier XS2306962841 XS2010037922 XS2252513713 /
225251371
3 Governing law(s) of the English law (other English Law; except Laws of the State of English Law; except
instrument than the Issuer for Status of Capital Kuwait for Status of Capital
subordination Securities and Securities and
provisions which are Subordination which are Subordination which
governed by the laws of governed by laws of Dubai are governed by laws
the Dubai International International Financial of Dubai International
Financial Centre) Centre. Financial Centre.
Regulatory treatment
4 Type of Capital Additional Tier 1 Additional Tier 1 Tier 2 Tier 2
5 Eligible at solo/ group / Group and Solo Group and Solo Group and Solo Group and Solo
group & solo
6 Instrument type Capital Securities by Capital Securities by Subordinated Debt Subordinated Debt
Issuer Issuer
Irrevocably guaranteed Irrevocably guaranteed by
by National Bank of National Bank of Kuwait
Kuwait S.A.K.P. on S.A.K.P. on Subordinated
Subordinated basis basis
7 Amount recognised in USD 700,000,000 USD 750,000,000 KD 150,000,000/- USD 300,000,000/-
Regulatory Capital (KD 211,295,000) (KD 227,737,500)
8 Par value of instrument USD 1,000/- USD 1,000/- KD 50,000/- USD 1,000/-
9 Accounting Shareholders’ equity Shareholders’ equity Liability-Amortised Cost Liability-Amortised
classification Cost
10 Original date of 24th February 2021 27th November 2019 18th November 2020 24th November’2020
issuance
11 Perpetual or dated Perpetual Perpetual Dated Dated

12 Original maturity date No maturity No maturity 18th November 2030 24th November’2030
13 Issuer call subject Yes Yes Yes Yes
to prior supervisory
approval
14 Optional call date, Optional Call date: Optional Call date: Any Optional Call date: 18 Optional Call date: 25
contingent call dates Six months prior to date three months prior November 2025 or November 2025 or any
and redemption the First Reset Date: to 27 November 2025; any Interest Payment Interest Payment Date
amount 24th February 2027, Capital Event or Tax Event hereafter; Capital Event thereafter; Capital
outstanding principal Call; Redemption amount or Taxation Reasons Event or Taxation
together with interest in case of redemption Principal (in whole or Reasons; Principal (in
accrued (in whole) date before First Reset in part) plus Accrued whole but not in part)
Date: 101% of Principal; Interest plus Accrued Interest
and in case of redemption
date after First Reset Date
at 100% Principal plus
Accrued Interest

111
2 Governance

15 Subsequent call dates, Semi-Annually Semi-Annually Semi-Annually Semi-Annually

if applicable
Coupons / dividends
16 Fixed or floating Fixed for first 6-year Fixed for first 6-year Fixed Tranche: Fixed for Fixed for first 5- year
dividend /coupon period; thereafter reset period; thereafter reset first 5 years and reset period, thereafter,
every year to a new rate every 6 years to a new thereafter to a new fixed reset to prevailing
to be the aggregate fixed rate equal to the rate for subsequent 5-year US Treasury rate
of the margin and the then 6-year USD Treasury period. plus margin.
interpolated 6-year US rate plus margin Floating Tranche:
Treasury rate. Floating rate determined
semi-annually subject to
a cap.
17 Coupon rate and any 3.625% p.a. Fixed-Rate 4.500% p.a. Fixed-Rate Fixed Tranche: 4.75% 2.50% p.a. Fixed rate
related index up to (but excluding), up to (but excluding) p.a. Fixed for 5 years for first 5-year period,
24th February’2027, 27 November 2025; and reset thereafter thereafter, reset to
there-after reset thereafter reset every 6 to a new fixed rate of 210.8 bps over the
every 6 years to a years to a new fixed rate the then CBK Discount prevailing 5-year US
new rate equal to the equal to the then 6-year Rate plus 3.25% p.a. for Treasury rate.
interpolated 6-year USD Treasury rate plus subsequent period.
US Treasury rate plus 2.832% p.a. margin Floating Tranche: CBK
2.875% margin Discount Rate plus
3.00% determined semi-
annually subject to a
cap of prevailing Fixed
Interest Rate plus 1%
18 Existence of a dividend Yes Yes No No
stopper
19 Fully discretionary, Payment of Interest Payment of Interest Payment of Interest is Payment of Interest is
partially discretionary may be cancelled at may be cancelled at the Mandatory. Mandatory.
or mandatory the sole-discretion sole-discretion of the
of the Issuer and Issuer and the Guarantor.
the Guarantor. Mandatory cancellation
Mandatory cancellation upon:-Insufficient
upon:-Insufficient Distributable Funds on a
Distributable Funds consolidated basis-Breach
on a consolidated of any applicable capital
basis-Breach of any requirements-Regulatory
applicable capital requirement to cancel
requirements-
Regulatory requirement
to cancel
20 Existence of step-up No No No No
or other incentive to
redeem
21 Non-cumulative or Non-cumulative Non-cumulative Not Applicable Not Applicable
cumulative
22 Convertible or non- Non-convertible Non-convertible Non-convertible Non-convertible
convertible
23 If convertible, Not Applicable Not Applicable Not Applicable Not Applicable
conversion trigger (s)
24 If convertible, fully or Not Applicable Not Applicable Not Applicable Not Applicable
partially

NBK Annual Report 2024

25 If convertible, Not Applicable Not Applicable Not Applicable Not Applicable
conversion rate
26 If convertible, Not Applicable Not Applicable Not Applicable Not Applicable
mandatory or optional
conversion
27 If convertible, specify Not Applicable Not Applicable Not Applicable Not Applicable
instrument type
convertible into
28 If convertible, specify Not Applicable Not Applicable Not Applicable Not Applicable
issuer of instrument it
converts into
29 Write-down feature Yes Yes Yes Yes
30 If write-down, write- Determination by Determination by Determination by Determination by
down trigger(s) Regulator on grounds Regulator on grounds Regulator on grounds Regulator on grounds
of non-viability or an of non-viability or an of non-viability or an of non-viability or an
immediate injection immediate injection of immediate injection immediate injection
of capital is required, capital is required, by way of capital is required, of capital is required,
by way of emergency of emergency intervention by way of emergency by way of emergency
intervention to remain to remain viable. intervention to remain intervention to remain
viable. viable. viable.
31 If write-down, full or Can be partial or full Can be partial or full Can be partial or full Can be partial or full
partial
32 If write-down, Permanent Permanent Permanent Permanent
permanent or
temporary
33 If temporary write- Not Applicable Not Applicable Not Applicable Not Applicable
down, description of
write-up mechanism
34 Position in Senior only to Ordinary Senior only to Ordinary Senior only to Ordinary Senior only to Ordinary
subordination hierarchy Equity shares; i.e. Equity shares; i.e. Equity shares and Equity shares and
in liquidation (specify qualifying CET1 qualifying CET1 qualifying Tier 1 qualifying Tier 1
instrument type instruments instruments instruments instruments
immediately senior to
instrument)
35 Non-compliant No No No No
transitioned features
36 If yes, specify non- Not Applicable Not Applicable Not Applicable Not Applicable
compliant features

113
2 Governance

3. Leverage Ratio: Common Disclosure Template

Table 33
Item KD 000s

On-balance sheet exposures

1 On-balance sheet items (excluding derivatives and SFTs, but including collateral) 40,338,156

2 (Asset amounts deducted in determining Basel III Tier 1 capital) (510,733)

3 Total on-balance sheet exposures (excluding derivatives and SFTs) (sum of lines 1 and 2) 39,827,423

Replacement cost associated with all derivatives transactions (i.e. net of eligible cash variation
4 margin) 52,780

5 Add-on amounts for PFE associated with all derivatives transactions 247,899

Gross-up for derivatives collateral provided where deducted from the balance sheet assets
6 pursuant to the operative accounting framework -

7 (Deductions of receivables assets for cash variation margin provided in derivatives transactions) -

8 (Exempted CCP leg of client-cleared trade exposures) -

9 Adjusted effective notional amount of written credit derivatives -

10 (Adjusted effective notional offsets and add-on deductions for written credit derivatives) -

11 Total derivative exposures (sum of lines 4 to 10) 300,679

12 Gross SFT assets (with no recognition of netting), after adjusting for sales accounting transactions -

13 (Netted amounts of cash payables and cash receivables of gross SFT assets) -

14 CCR exposure for SFT assets -

15 Agent transaction exposures -

16 Total securities financing transaction exposures (sum of lines 12 to 15) -

Other off-balance sheet exposures

17 Off-balance sheet exposure at gross notional amount 15,407,987

18 (Adjustments for conversion to credit equivalent amounts) (11,483,611)

19 Off-balance sheet items (sum of lines 17 and 18) 3,924,376

20 Tier 1 capital 4,173,934

21 Total exposures (sum of lines 3, 11, 16 and 19) 44,052,478

22 Basel III leverage ratio 9.5%

NBK Annual Report 2024

4. Glossary Of Terms

Term Definition

Additional Tier 1 Capital Additional Tier 1 Capital is a Basel III defined concept and consists of high-quality capital. It
essentially includes providing a permanent and unrestricted commitment of funds, is freely
available to absorb losses at the point of non-viability, ranks behind the claims of depositors
and other more senior creditors in the event of a wind-up, and provides for fully discretionary
capital distributions.

Basel III Refers to the “Capital Adequacy Ratio-Basel III for conventional banks” regulations issued by
Central Bank of Kuwait Circular number 2/RB, RBA/A336/2015 dated 24 June 2015

Capital Conservation A capital conservation buffer of 2.5% (Nil from 1st April 2020 to 31st December 2021)
Buffer (expressed as a percentage of risk-weighted assets) has been subsumed in the Minimum
Common Equity Tier 1 Capital requirement level.

Countercyclical Buffer A countercyclical buffer requirement that varies from 0% to 2.5% which, when triggered as a
requirement at the discretion of Central Bank of Kuwait, is required to be met from Common
Equity Tier 1 capital.

Common Equity Tier 1 Common Equity Tier 1 Capital is the highest quality of capital available reflecting the
Capital permanent and unrestricted commitment of funds that are freely available to absorb losses.
It essentially includes ordinary share capital, retained earnings and reserves less prescribed
deductions.

Domestic Systemically- A Domestic Systemically-Important Bank Buffer that varies from 0.5% to 2% required to be
Important Bank Buffer met in the form of Common Equity Tier 1 Capital which will be determined at the level of each
bank identified as systemically important by Central Bank of Kuwait on an annual basis.

ECAI An External Credit Assessment Institution (ECAI) as recognised by Central Bank of Kuwait from
time to time for the purposes of the assigning risk-weights to obligors under the Standardised
Approach.

Leverage Ratio Calculated in accordance with the requirements of CBK Circular number 2/BS/342/2014
dated 21 October 2014. Leverage ratio is defined as the “capital” measure (being Tier 1
capital) divided by the “exposure” measure (being the sum of on-balance sheet assets,
derivative exposures and off-balance sheet exposures).

Liquidity Coverage Ratio Calculated in accordance with the requirements of CBK Circular number 2/RB/345/2014
(LCR) dated 23 December 2014. The ratio is calculated by taking a financial institution’s stock of
high-quality liquid assets (“HQLAs”) – which include low-risk, highly marketable asset classes,
designed to provide significant sources of liquidity in such a stress scenario – and dividing it
by its projected net cash outflows over the immediately following 30-day period.

Net-Stable Funding Calculated in accordance with the requirements of CBK Circular number 2/BS/356/2015
Ratio (NSFR) dated 25 October 2015 from 2018. The NSFR is defined as the amount of available stable
funding (“ASF”) relative to the amount of required stable funding (“RSF”). ASF is defined as
the portion of capital and liabilities expected to be reliable over the time horizon considered
by the NSFR, which extends to one year. RSF is defined as the portion of assets and off-
balance sheet exposures expected to be funded on an ongoing basis over a one-year horizon.
The amount of the stable funding required of a specific institution is a function of the liquidity
characteristics and residual maturities of the various assets held by that institution as well as
those of its off-balance sheet exposures.

Significant Investments Significant Investments in capital of banking, financial and insurance entities are those where
the bank owns more than 10% of the issued common share capital of the issuing entity or
where the entity is an affiliate of the bank.

Tier 2 Capital Tier 2 Capital consists of eligible capital instruments that provide an unrestricted commitment
of funds for a defined period that is available to absorb losses at the point of non-viability,
subordinated to claims of depositors in the event of wind-up. Limited recognition of general
provisions held against future, presently unidentifiable losses are eligible for inclusion in Tier
2 Capital.

115
 Financial Statements
The objective of our strategy
is to achieve consistently
superior returns for
shareholders. The strategy is
built on 3 cornerstones that
guide the priorities we set
for our business units and
internal functions. They are to
defend our leadership in core
businesses, to grow outside
the core, and to improve
profitability.

NBK Annual Report 2024

117
3 Financial Statements

Board of Directors’ Report

The Directors have pleasure in presenting their report together with the audited consolidated financial statements of National Bank of
Kuwait S.A.K.P. (the “Bank”) and its subsidiaries (collectively the “Group”) for the year ended 31 December 2024.

2024 Financial Performance

The Group has delivered strong financial results for the year 2024, notwithstanding the continuing challenges arising from
macroeconomic and geopolitical situations, while benefitting from increase in business activities and volume growth.

The Group reported net profit attributable to shareholders of the Bank of KD 600.1 million compared to KD 560.6 million for 2023, an
increase of 7%. Operating profit amounted to KD 783.2 million compared to KD 740.3 million in 2023, an increase of 5.8%.

Net interest income and net income from Islamic financing totaled KD 980.1 million (2023: KD 905.1 million). Net fees and commissions
increased to KD 205.7 million (2023: KD 196.6 million). Net investment income was KD 23.0 million in 2024 (2023: KD 27.5 million). Net
gains from dealing in foreign currencies increased to KD 41.2 million in 2024 (2023: KD 36.1 million).

Total operating expenses were KD 468.0 million (2023: KD 426.5 million). The cost to income ratio for 2024 increased to 37.4% (2023:
36.6%).

The provision charge for credit losses and impairment losses were KD 86.5 million (2023: KD 103.1 million).

The return on average equity for 2024 was 15.1% (2023: 15%).

2024 Balance Sheet

Total assets of the Group grew to KD 40,338.2 million from KD 37,665.0 million at the end of 2023, an increase of 7.1%. Loans,
advances and Islamic financing to customers grew by KD 1,426.6 million to KD 23,707.6 million, an increase of 6.4%. Investment
securities grew by KD 741.7 million to KD 7,626.5 million, an increase of 10.8%.

Customer deposits grew to KD 22,866.2 million from KD 21,949.0 million at the end of 2023, an increase of 4.2%. The Group benefits
from a loyal customer base across the network, whose deposits remain a continuing source of stable funding. Due to banks were KD
5,403.8 million (2023: KD 3,963.8 million). Deposits from other financial institutions were KD 2,949.8 million (2023: KD 3,725.6 million).
Certificates of deposits issued were KD 1,501.5 million (2023: KD 822.9 million) and other borrowed funds were KD 1,520.4 million
(2023: KD 1,331.0 million).

The Group maintained a strong liquidity position with cash, short term funds, Central Bank of Kuwait bonds and Kuwait Government
treasury bonds amounting to KD 5,815.5 million at the year-end. Deposits with banks were KD 1,383.3 million at the year end. The
Group has continued to maintain Basel III liquidity ratios well in excess of minimum requirements.

The Group’s general provisions in respect of on-balance sheet credit facilities were KD 674.8 million at the year-end (2023: KD 697.6
million), whilst specific provisions were KD 189.5 million at the year-end (2023: KD 165.3 million). The Group operates a conservative
credit policy with a balanced diversification across all business sectors and geographical areas. Loan collateral profiles and values are
continually monitored to ensure that optimum protection is afforded to the Group at all times.

Cash and non-cash credit facilities provided by the Bank to Board Members and Executive Officers and their related parties were
KD 68.5 million at the year-end against collateral of KD 151.5 million. Deposits of Board Members and Executive Officers and their
related parties were KD 39.4 million. Proposed remuneration to Directors of the Bank was KD 770 thousand.

NBK Annual Report 2024

Equity

Total equity attributable to the shareholders of the Bank after deducting the proposed cash dividend of KD 208.2 million was KD
3,904.1 million (2023: KD 3,685.5 million).

The Basel III capital adequacy ratio was 17.3% at the year-end (2023: 17.3%) as compared to the CBK prescribed regulatory minimum
of 15% (2023: 15%). The leverage ratio was 9.5% at the year-end (2023: 9.7%) as compared to the CBK prescribed regulatory minimum
of 3%.

Capital Market Authority Requirements

The necessary measures were taken to ensure compliance with Law No (7) of 2010, and subsequent Executive By-Laws relating to the
Establishment of the Capital Market Authority and Organization of Securities Activities.

The Bank maintains a record for reporting the Bank’s shares owned by the Insider Persons (or their dependent children) to the Capital
Market Authority and Boursa Kuwait Company.

Bonus Shares, Dividends and Proposed Appropriations

Net profit for the year was principally allocated as follows:

1. KD 291.5 million to the dividend account for the distribution of a cash dividend. Proposed final dividend of KD 208.2 million (25 fils
per share) subject to the approval of shareholders at the annual general meeting (proposed dividend - 25 fils in 2023). An interim
cash dividend of KD 83.3 million (10 fils per share) was paid during 2024 (10 fils per share in 2023).
2. KD 41.6 million to the share capital account to cover the issuance of bonus shares equal to 5% of share capital at the end of 2024
(5% for 2023) (equivalent to 416,322,145 shares with a nominal value of 100 fils per share) subject to the approval of shareholders
at the annual general meeting.
3. KD 19.8 million to the statutory reserve account to make the statutory reserve in excess of 50% of share capital.
4. KD 21.8 million to interest and profit payment towards perpetual Tier 1 Capital Securities and perpetual Tier 1 Sukuk.
5. KD 225.4 million to retained earnings.

Financial highlights

KD million 2024 2023 2022

Total assets 40,338.2 37,665.0 36,338.4
Loans, advances and Islamic financing to customers 23,707.6 22,281.0 20,998.4
Customer deposits 22,866.2 21,949.0 20,178.1
Net operating income 1,251.2 1,166.8 1,009.7
Profit attributable to shareholders of the Bank 600.1 560.6 509.1

119
3 Financial Statements

Independent Auditors’ Report to

The Shareholders of National Bank
of Kuwait S.A.K.P.
Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of National Bank of Kuwait S.A.K.P. (the “Bank”) and its subsidiaries (together, “the
Group”), which comprise the consolidated statement of financial position as at 31 December 2024, and the consolidated statement of
income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of
cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial
position of the Group as at 31 December 2024, and its consolidated financial performance and its consolidated cash flows for the year
then ended in accordance with IFRS Accounting Standards, as adopted by Central Bank of Kuwait (“CBK”) for use by the State of Kuwait.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are
further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics
for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical
responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have identified the following key audit matter:

Credit losses on loans, advances and Islamic financing to customers

The recognition of credit losses on loans, advances and Islamic financing (“credit facilities”) to customers is the higher of Expected Credit
Loss (“ECL”) under International Financial Reporting Standard 9: Financial Instruments (“IFRS 9”), determined in accordance with the CBK
guidelines, and the provision required by the CBK rules on classification of credit facilities and calculation of their provision (the “CBK
rules”) as disclosed in the accounting policies and in Note 13 to the consolidated financial statements.

Recognition of ECL under IFRS 9, determined in accordance with CBK guidelines, is a complex accounting policy, which requires
considerable judgement in its implementation. ECL is dependent on management’s judgement in assessing significant increase in
credit risk and classification of credit facilities into various stages, determining when a default has occurred, development of models for
assessing the probability of default of customers and estimating cash flows from recovery procedures or realization of collateral.

Recognition of specific provision on impaired facility under the CBK rules is based on the instructions by CBK on the minimum provision to
be recognized together with any additional provision to be recognised based on management estimate of expected cash flows related to
that credit facility.

NBK Annual Report 2024

Due to the significance of credit facilities, the related estimation uncertainty and management’s judgement in assessing significant
increase in credit risk and classification of financing facilities into various stages and adjustments to ECL models, where applicable, this
was considered as a key audit matter.

Our audit procedures included assessing the design and implementation of controls over the inputs and assumptions used by the Group
in developing the models, its governance and review controls performed by the management in determining the stage classification and
adequacy of credit losses.

With respect to the ECL based on IFRS 9, determined in accordance with the CBK guidelines, we have selected samples of credit facilities
outstanding as at the reporting date, which included rescheduled credit facilities, and evaluated the Group’s determination of significant
increase in credit risk and the resultant basis for classification of the credit facilities into various stages. We involved our specialists to
review the Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) and the overlays, if any, considered by
management, in order to determine ECL taking into consideration CBK guidelines. For a sample of credit facilities, we have computed the
ECL including the eligibility and value of collateral considered in the ECL models used by the Group. We have also evaluated the various
inputs and assumptions used by the Group’s management to determine ECL.

Further, for the CBK rules provision requirements, we have assessed the criteria for determining whether there is a requirement to
calculate any credit loss in accordance with the related regulations and, if required, it has been computed accordingly. For the samples
selected, which included rescheduled credit facilities, we have verified whether all impairment events have been identified by the Group’s
management. For the selected samples which also included impaired credit facilities, we have assessed the valuation of collateral and
checked the resultant provision calculations.

Other Information included in the Group’s 2024 Annual Report

Management is responsible for the other information. Other information consists of the information included in the Group’s 2024 Annual
Report, other than the consolidated financial statements and our auditors’ report thereon. We obtained the report of the Bank’s Board of
Directors prior to the date of our auditors’ report, and we expect to obtain the remaining sections of the Group’s Annual Report for the year
ended 31 December 2024 after the date of our auditors’ report.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance
or conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained during the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the
other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of other
information; we are required to report that fact. We have nothing to report in this regard.

121
3 Financial Statements

Independent Auditors’ Report to The Shareholders of

National Bank of Kuwait S.A.K.P. (continued)

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS
Accounting Standards as adopted by CBK for use by the State of Kuwait, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management
either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit.
We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’
report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
• Plan and perform the Group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business units within the Group as a basis for forming an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and review of the audit work performed for purposes of the Group audit. We remain solely responsible for
our audit opinion.

NBK Annual Report 2024

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in
our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Furthermore, in our opinion proper books of account have been kept by the Bank and the consolidated financial statements, together
with the contents of the report of the Bank’s Board of Directors relating to these consolidated financial statements, are in accordance
therewith. We further report that we obtained all the information and explanations that we required for the purpose of our audit and that
the consolidated financial statements incorporate all information that is required by the Capital Adequacy Regulations and Financial
Leverage Ratio Regulations issued by the Central Bank of Kuwait (“CBK”) as stipulated in CBK Circular Nos. 2/RB, RBA/336/2014 dated
24 June 2014 and its amendments, and 2/BS/342/2014 dated 21 October 2014, and its amendments, respectively, the Companies Law
No. 1 of 2016, as amended, and its executive regulations, as amended, or by the Bank’s Memorandum of Incorporation and Articles of
Association, as amended, that an inventory was duly carried out and that, to the best of our knowledge and belief, no violations of the
Capital Adequacy Regulations and Financial Leverage Ratio Regulations issued by the CBK as stipulated in CBK Circular Nos.
2/RB, RBA/336/2014 dated 24 June 2014 and its amendments, and 2/BS/342/2014 dated 21 October 2014, and its amendments,
respectively, the Companies Law No. 1 of 2016, as amended, and its executive regulations, as amended, or of the Bank’s Memorandum
of Incorporation and Articles of Association, as amended, have occurred during the year ended 31 December 2024 that might have had a
material effect on the business of the Bank or on its financial position.

We further report that, during the course of our audit, we have not become aware of any violations of the provisions of Law No. 32 of 1968,
as amended, concerning currency, the CBK and the organisation of banking business, and its related regulations during the year ended 31
December 2024 that might have had a material effect on the business of the Bank or on its financial position.

ABDULKARIM AL SAMDAN BADER A. AL-WAZZAN

LICENCE NO. 208 A LICENCE NO. 62 A
EY DELOITTE & TOUCHE
AL-AIBAN, AL-OSAIMI & PARTNERS AL WAZZAN & CO.

28 January 2025
Kuwait

123
3 Financial Statements

Consolidated Financial Statements

Consolidated Statement of Income 125
Consolidated Statement of Comprehensive Income 126
Consolidated Statement of Financial Position 127
Consolidated Statement of Cash Flows 128
Consolidated Statement of Changes in Equity 129

Notes To The Consolidated Financial Statements

1 Incorporation and Registration 131

2 Material Accounting Policies 131
3 Segmental Analysis 147
4 Interest Income 149
5 Interest Expense 150
6 Net Fees and Commissions 150
7 Net Investment Income 150
8 Provision charge for credit losses and impairment losses 151
9 Taxation 151
10 Earnings per Share 152
11 Cash and Short Term Funds 152
12 Deposits with Banks 152
13 Loans, Advances and Islamic Financing to Customers 153
14 Financial Investments 159
15 Goodwill and Other Intangible Assets 163
16 Other Assets 164
17 Other Borrowed Funds 166
18 Other Liabilities 167
19 Share Capital and Reserves 168
20 Dividend 171
21 Perpetual Tier 1 Capital Securities 171
22 Share Based Payment 172
23 Fair Value of Financial Instruments 172
24 Subsidiaries 175
25 Commitments and Contingent Liabilities 177
26 Derivative Financial Instruments and Hedge Accounting 177
27 Related Party Transactions 179
28 Risk Management 180
29 Capital 193
30 Funds Under Management 194

NBK Annual Report 2024

Consolidated Statement of
Income
For the year ended 31 December 2024

2024 2023 2024 2023

Notes KD 000’s KD 000’s USD 000’s USD 000’s

Interest income 4 1,798,909 1,632,748 5,838,718 5,299,409

Interest expense 5 1,027,292 908,154 3,334,281 2,947,595
Net interest income 771,617 724,594 2,504,437 2,351,814

Murabaha and other Islamic financing income 464,628 402,482 1,508,043 1,306,336
Finance cost and Distribution to depositors 256,186 221,939 831,503 720,347
Net income from Islamic financing 208,442 180,543 676,540 585,989
Net interest income and net income from Islamic financing 980,059 905,137 3,180,977 2,937,803
Net fees and commissions 6 205,683 196,606 667,585 638,124
Net investment income 7 22,979 27,466 74,583 89,146
Net gains from dealing in foreign currencies 41,159 36,123 133,590 117,244
Other operating income 1,323 1,435 4,294 4,658
Non-interest income 271,144 261,630 880,052 849,172
Net operating income 1,251,203 1,166,767 4,061,029 3,786,975
Staff expenses 252,578 233,156 819,792 756,754
Other administrative expenses 166,834 147,342 541,493 478,228
Depreciation of premises and equipment 46,907 44,314 152,246 143,830
Amortisation of intangible assets 15 1,647 1,647 5,346 5,346
Operating expenses 467,966 426,459 1,518,877 1,384,158
Operating profit before provision for credit losses
and impairment losses 783,237 740,308 2,542,152 2,402,817
Provision charge for credit losses and impairment losses 8 86,464 103,068 280,636 334,527
Operating profit before taxation and directors’ remuneration 696,773 637,240 2,261,516 2,068,290
Taxation 9 57,443 48,097 186,443 156,109
Directors’ remuneration 27 770 770 2,499 2,499
Profit for the year 638,560 588,373 2,072,574 1,909,682
Attributable to:
Shareholders of the Bank 600,122 560,620 1,947,816 1,819,604
Non-controlling interests 38,438 27,753 124,758 90,078
638,560 588,373 2,072,574 1,909,682
Basic earnings per share attributable to shareholders of the Bank 10 69 fils 65 fils 22 Cents 21 Cents

The attached notes 1 to 30 form part of these consolidated financial statements.

125
3 Financial Statements

Consolidated Statement of
Comprehensive Income
For the year ended 31 December 2024

2024 2023 2024 2023

Note KD 000’s KD 000’s USD 000’s USD 000’s

Profit for the year 638,560 588,373 2,072,574 1,909,682

Other comprehensive income:
Investment in debt securities measured at FVOCI:
Net change in fair value 11,079 4,506 35,959 14,625
Net transfer to consolidated statement of income (1,236) 376 (4,012) 1,220
9,843 4,882 31,947 15,845
Exchange differences on translation of foreign operations (76,445) (13,699) (248,117) (44,463)
Other comprehensive loss for the year reclassifiable to
consolidated statement of income in subsequent years (66,602) (8,817) (216,170) (28,618)
Net (loss) gain on investments in equity instruments designated at
FVOCI (632) 601 (2,052) 1,951
Actuarial (loss) gain in respect of defined benefit plans 18 (1,970) 3,969 (6,394) 12,882
Other comprehensive (loss) income for the year not reclassifiable
to consolidated statement of income in subsequent years (2,602) 4,570 (8,446) 14,833
Other comprehensive loss for the year (69,204) (4,247) (224,616) (13,785)
Total comprehensive income for the year 569,356 584,126 1,847,958 1,895,897
Attributable to:
Shareholders of the Bank 532,091 553,485 1,727,007 1,796,446
Non-controlling interests 37,265 30,641 120,951 99,451
569,356 584,126 1,847,958 1,895,897

The attached notes 1 to 30 form part of these consolidated financial statements.

NBK Annual Report 2024

Consolidated Statement of
Financial Position
As at 31 December 2024

2024 2023 2024 2023

Notes KD 000’s KD 000’s USD 000’s USD 000’s
Assets
Cash and short term funds 11 5,323,273 4,384,700 17,277,744 14,231,418
Central Bank of Kuwait bonds 14 343,652 856,815 1,115,391 2,780,964
Kuwait Government treasury bonds 14 148,555 194,111 482,165 630,026
Deposits with banks 12 1,383,330 1,318,121 4,489,873 4,278,225
Loans, advances and Islamic financing to customers 13 23,707,609 22,281,004 76,947,774 72,317,442
Investment securities 14 7,626,478 6,884,821 24,753,256 22,346,060
Land, premises and equipment 517,392 506,812 1,679,299 1,644,959
Goodwill and other intangible assets 15 510,733 508,416 1,657,686 1,650,166
Other assets 16 777,134 730,191 2,522,343 2,369,981
Total assets 40,338,156 37,664,991 130,925,531 122,249,241
Liabilities
Due to banks 5,403,802 3,963,802 17,539,117 12,865,310
Deposits from other financial institutions 2,949,756 3,725,629 9,574,021 12,092,272
Customer deposits 22,866,205 21,948,957 74,216,829 71,239,718
Certificates of deposit issued 1,501,457 822,899 4,873,278 2,670,883
Other borrowed funds 17 1,520,422 1,331,006 4,934,833 4,320,045
Other liabilities 18 939,782 966,123 3,050,250 3,135,745
Total liabilities 35,181,424 32,758,416 114,188,328 106,323,973
Equity
Share capital 19 832,644 792,995 2,702,512 2,573,823
Proposed bonus shares 20 41,633 39,649 135,128 128,689
Statutory reserve 19 416,324 396,499 1,351,263 1,286,917
Share premium account 19 803,028 803,028 2,606,388 2,606,388
Treasury share reserve 19 34,961 34,961 113,473 113,473
Other reserves 19 1,983,738 1,816,640 6,438,617 5,896,267
Equity attributable to shareholders of the Bank 4,112,328 3,883,772 13,347,381 12,605,557
Perpetual Tier 1 Capital Securities 21 439,032 439,032 1,424,966 1,424,966
Non-controlling interests 24 605,372 583,771 1,964,856 1,894,745
Total equity 5,156,732 4,906,575 16,737,203 15,925,268
Total liabilities and equity 40,338,156 37,664,991 130,925,531 122,249,241

Hamad Mohamed Al-Bahar Isam J. Al Sager

Chairman Vice Chairman and Group Chief
Executive Officer

The attached notes 1 to 30 form part of these consolidated financial statements.

127
3 Financial Statements

Consolidated Statement of
Cash Flows
For the year ended 31 December 2024

2024 2023 2024 2023

Notes KD 000’s KD 000’s USD 000’s USD 000’s
Operating activities
Profit for the year 638,560 588,373 2,072,574 1,909,682
Adjustments for:
Net investment income 7 (22,979) (27,466) (74,583) (89,146)
Provision for staff terminal benefits 18 11,568 9,981 37,546 32,395
Depreciation of premises and equipment 46,907 44,314 152,246 143,830
Amortisation of intangible assets 15 1,647 1,647 5,346 5,346
Provision charge for credit losses and impairment losses 8 86,464 103,068 280,636 334,528
Taxation 9 57,443 48,097 186,443 156,108
Cash flows from operating activities before changes in operating
assets and liabilities 819,610 768,014 2,660,208 2,492,743
Changes in operating assets and liabilities:
Central Bank of Kuwait bonds 513,163 24,426 1,665,573 79,279
Kuwait Government treasury bonds 47,000 20,138 152,548 65,362
Deposits with banks (63,589) 174,677 (206,391) 566,949
Loans, advances and Islamic financing to customers (1,699,087) (1,354,615) (5,514,726) (4,396,673)
Other assets (18,607) 46,773 (60,393) 151,811
Due to banks 1,440,006 (54,177) 4,673,827 (175,842)
Deposits from other financial institutions (768,673) (15,248) (2,494,882) (49,490)
Customer deposits 1,179,328 1,770,895 3,827,744 5,747,793
Certificates of deposit issued 678,558 (978,724) 2,202,395 (3,176,644)
Other liabilities (87,748) 175,372 (284,803) 569,205
Payment of staff terminal benefits 18 (6,370) (6,963) (20,675) (22,600)
Tax paid (55,904) (39,587) (181,447) (128,488)
Net cash from operating activities 1,977,687 530,981 6,418,978 1,723,405
Investing activities
Purchase of investment securities (3,570,022) (3,633,073) (11,587,218) (11,791,863)
Proceeds from sale/redemption of investment securities 2,723,546 2,480,036 8,839,812 8,049,452
Dividend income 7 2,685 2,570 8,715 8,341
Proceeds from sale of land, premises and equipment 1,072 1,817 3,479 5,897
Purchase of land, premises and equipment (52,100) (56,260) (169,101) (182,603)
Change in holding in subsidiaries (782) (11,884) (2,538) (38,572)
Purchase of investment properties (8,885) (38,494) (28,838) (124,940)
Proceeds from sale of investment properties 10,532 1,281 34,184 4,158
Capital repayment from investment in associate 230 - 746 -
Acquisition of a subsidiary net of cash acquired (2,710) - (8,796) -
Net cash used in investing activities (896,434) (1,254,007) (2,909,555) (4,070,130)
Financing activities
Net proceeds from issuance of Global medium term notes 17 152,571 - 495,200 -
Interest paid on Perpetual Tier 1 Capital Securities (18,163) (18,224) (58,952) (59,150)
Profit distribution on Perpetual Tier 1 Sukuk by a subsidiary (6,049) (6,079) (19,633) (19,731)
Net movement in other medium and short term borrowing 23,138 86,290 75,099 280,071
Dividends paid (281,513) (268,107) (913,707) (870,194)
Dividends paid by subsidiaries to non-controlling interests (12,664) (9,606) (41,104) (31,178)
Net cash used in financing activities (142,680) (215,726) (463,097) (700,182)
Increase (decrease) in cash and short term funds 938,573 (938,752) 3,046,326 (3,046,907)
Cash and short term funds at the beginning of the year 4,384,700 5,323,452 14,231,418 17,278,325
Cash and short term funds at the end of the year 11 5,323,273 4,384,700 17,277,744 14,231,418

The attached notes 1 to 30 form part of these consolidated financial statements.

NBK Annual Report 2024

 Equity attributable to shareholders of the Bank KD 000’s
Perpetual
Proposed Share Treasury Tier 1 Non -
Share bonus Statutory premium share Other Capital controlling Total
capital shares reserve account reserve reserves Total Securities interests equity
(Note 19e)
Balance as at 1 January 2024 792,995 39,649 396,499 803,028 34,961 1,816,640 3,883,772 439,032 583,771 4,906,575
Profit for the year - - - - - 600,122 600,122 - 38,438 638,560
Other comprehensive loss - - - - - (68,031) (68,031) - (1,173) (69,204)
Total comprehensive income - - - - - 532,091 532,091 - 37,265 569,356
Transfer to statutory reserve
(Note 19b) - - 19,825 - - (19,825) - - - -
Issue of bonus shares (Note
19a) 39,649 (39,649) - - - - - - - -
Final cash dividend paid
(2023) - - - - - (198,249) (198,249) - - (198,249)
For the year ended 31 December 2024

Interim cash dividend paid

Changes in Equity

(2024)– (Note 20) - - - - - (83,264) (83,264) - - (83,264)

Proposed bonus shares (Note
20) - 41,633 - - - (41,633) - - - -
Interest paid on perpetual Tier
1 Capital Securities - - - - - (18,163) (18,163) - - (18,163)
Profit distribution on
Perpetual Tier 1 Sukuk by a
subsidiary - - - - - (3,652) (3,652) - (2,397) (6,049)
Change in holding in
subsidiaries - - - - - (75) (75) - (707) (782)
Consolidated Statement of

Dividend paid to non-

controlling interests by
subsidiaries - - - - - - - - (12,664) (12,664)
Other movements - - - - - (132) (132) - 104 (28)
At 31 December 2024 832,644 41,633 416,324 803,028 34,961 1,983,738 4,112,328 439,032 605,372 5,156,732

129
The attached notes 1 to 30 form part of these consolidated financial statements.
 3
Equity attributable to shareholders of the Bank KD 000’s

NBK
Perpetual
Proposed Share Treasury Tier 1 Non -
Share bonus Statutory premium share Other Capital controlling Total
capital shares reserve account reserve reserves Total Securities interests equity
(Note 19e)

Annual Report
Balance as at 1 January 2023 755,233 37,762 377,618 803,028 34,961 1,614,386 3,622,988 439,032 572,926 4,634,946
Profit for the year - - - - - 560,620 560,620 - 27,753 588,373
Financial Statements

2024
Other comprehensive (loss)
income - - - - - (7,135) (7,135) - 2,888 (4,247)
Total comprehensive income - - - - - 553,485 553,485 - 30,641 584,126
Transfer to statutory reserve
(Note 19b) - - 18,881 - - (18,881) -     - - -
Issue of bonus shares (Note
19a) 37,762 (37,762) - - - -     -     - - -
Final cash dividend paid
For the year ended 31 December 2024

(2022) - - - - - (188,808) (188,808) - - (188,808)

Changes in Equity

Interim cash dividend paid

(2023)– (Note 20) - - - - - (79,299) (79,299) - - (79,299)
Proposed bonus shares
(Note 20) - 39,649 - - - (39,649) -     - - -
Interest paid on perpetual Tier
1 Capital Securities - - - - - (18,224) (18,224) - - (18,224)
Profit distribution on
Perpetual Tier 1 Sukuk by a
subsidiary - - - - - (3,664) (3,664) - (2,415) (6,079)
Change in holding in
Consolidated Statement of

subsidiaries - - - - - (3,906) (3,906) - (7,978) (11,884)

Dividend paid to non-
controlling interests by
subsidiaries - - - - - -     -     - (9,606) (9,606)
Other movements - - - - - 1,200 1,200 - 203 1,403
At 31 December 2023 792,995 39,649 396,499 803,028 34,961 1,816,640 3,883,772 439,032 583,771 4,906,575

The attached notes 1 to 30 form part of these consolidated financial statements.

Notes to the Consolidated Financial
Statements
31 December 2024

1 INCORPORATION AND REGISTRATION

The consolidated financial statements of National Bank of Kuwait S.A.K.P. (the “Bank”) and its subsidiaries (collectively the “Group”) for the
year ended 31 December 2024 were authorised for issue in accordance with a resolution of the directors on 12 January 2025. The Annual
General Meeting of the shareholders has the power to amend these consolidated financial statements after issuance. The Bank is a public
shareholding company incorporated in Kuwait in 1952 and is registered as a bank (commercial registration number - 8490) with the Central
Bank of Kuwait. The Bank’s registered office is at Al Shuhada Street, P.O. Box 95, Safat 13001, Kuwait. The principal activities of the Bank
are described in Note 3.

2 MATERIAL ACCOUNTING POLICIES

2.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with the regulations for financial services institutions as issued
by the Central Bank of Kuwait (CBK) in the State of Kuwait. These regulations require banks and other financial institutions regulated
by CBK to adopt the International Financial Reporting Standards (“IFRS”) with an amendment for measuring the expected credit loss
(“ECL”) on credit facilities at the higher of ECL computed under IFRS 9 – ‘Financial Instruments’ in accordance to the CBK guidelines or the
provisions as required by CBK instructions along with its consequent impact on related disclosures.

The above framework is hereinafter referred to as ‘IFRS Accounting Standards as adopted by CBK for use in the State of Kuwait’.

The consolidated financial statements are prepared under the historical cost convention except for the measurement at fair value of
derivatives, investment securities measured at fair value and investment properties. In addition and as more fully described below, assets
and liabilities that are hedged in fair value hedging relationships are carried at fair value to the extent of the risk being hedged.

2.2 Changes in material accounting policies

New and amended standards and interpretations
The Group applied the following amendments effective from 1 January 2024:

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)

The amendment to IFRS 16 Leases specifies the requirements that a seller-lessee uses in measuring the lease liability arising in a sale
and leaseback transaction, to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use
it retains. A sale and leaseback transaction involves the transfer of an asset by an entity (the seller-lessee) to another entity (the buyer-
lessor) and the leaseback of the same asset by the seller-lessee. The amendment is intended to improve the requirements for sale and
leaseback transactions in IFRS 16. It does not change the accounting for leases unrelated to sale and leaseback transactions.

Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (Amendments to IAS 1)

The amendments to IAS 1 clarify that the classification of liabilities as current or non-current is based on rights that exists at the end of the
reporting period to defer the settlement of liability for at least twelve months from the end of the reporting period, irrespective of whether
the entity expects to exercise its right or not. The rights are considered to be in existence if covenants are complied with at the end of the
reporting period.

The amendments also clarify that right to defer settlement of liability is not affected by the covenants that are required to be complied
after the end of the reporting period. However, additional disclosure requirements apply for such liabilities.

The amendments did not have an impact on the Group’s consolidated statement of financial position, which is presented in order of
liquidity.

Other amendments to IFRSs which are effective for annual accounting period starting from 1 January 2024 did not have any material
impact on the accounting policies, financial position or performance of the Group.

131
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

2 MATERIAL ACCOUNTING POLICIES (continued)

2.2 Changes in material accounting policies (continued)

Standards issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s
consolidated financial statements are disclosed below.

Lack of Exchangeability (Amendments to IAS 21) – 1 January 2025

The amendments to IAS 21 specify how to assess whether a currency is exchangeable and how to determine the exchange rate when
it is not. Applying the amendments, a currency is not exchangeable into the other currency if an entity can only obtain no more than an
insignificant amount of the other currency at the measurement date for a specified purpose. When a currency is not exchangeable at the
measurement date, an entity is required to estimate the spot exchange rate as the rate that would have applied to an orderly exchange
transaction at the measurement date between market participants under prevailing economic conditions. In that case, an entity is required
to disclose information that enables users of its financial statements to evaluate how the currency’s lack of exchangeability affects, or is
expected to affect, the entity’s financial performance, financial position and cash flows.

Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) – 1 January 2026

The Amendments include:

• A clarification that a financial liability is derecognised on the ‘settlement date’ and introduce an accounting policy choice (if specific
conditions are met) to derecognise financial liabilities settled using an electronic payment system before the settlement date.
• Additional guidance on how the contractual cash flows for financial assets with environmental, social and corporate governance (ESG)
and similar features should be assessed.
• Clarifications on what constitute ‘non-recourse features’ and what are the characteristics of contractually linked instruments.
• The introduction of disclosures for financial instruments with contingent features and additional disclosure requirements for equity
instruments classified at fair value through other comprehensive income (OCI).

Presentation and disclosures in financial statements (IFRS 18) – 1 January 2027

IFRS 18 replaces IAS 1 Presentation of Financial Statements, carrying forward many of the requirements in IAS 1 unchanged and
complementing them with new requirements. These include:

• The requirement to classify all income and expense into specified categories and provide specified totals and subtotals in the
statement of profit or loss.
• Enhanced guidance on the aggregation, location and labeling of items across the primary financial statements and the notes.
• Mandatory disclosures about management-defined performance measures (MPMs - a subset of alternative performance measures).

IFRS 18 also makes consequential amendments to other accounting standards, including IAS 7 Statement of Cash Flows, IAS 33 Earnings
per Share and IAS 34 Interim Financial Statements.

The Group is currently evaluating the impact of these amendments. The Group will adopt it when the amendments become effective.

2.3 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Bank as at 31 December each year and its subsidiaries
as at the same date or a date not earlier than three months from 31 December. The financial statements of subsidiaries and associates
are prepared using consistent accounting policies and are adjusted, where necessary, to bring the accounting policies in line with those
of the Group. All intercompany balances and transactions, including unrealised profits arising from intra-group transactions have been
eliminated on consolidation.

a. Subsidiaries
Subsidiaries are all entities over which the Bank has control. The control is achieved when the Bank is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The Group
re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the
three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when
the Group loses control of the subsidiary. Refer Note 24 for the list of major subsidiaries, their principal businesses and the Group’s
effective holding.

NBK Annual Report 2024

2 MATERIAL ACCOUNTING POLICIES (continued)
2.3 Basis of consolidation (continued)

b. Non-controlling interest
Interest in the equity of subsidiaries not attributable to the Group is reported as non-controlling interest in the consolidated statement
of financial position. Non-controlling interest in the acquiree is measured at the proportionate share in the recognised amounts of the
acquiree’s identifiable net assets. Losses are allocated to the non-controlling interest even if they exceed the non-controlling interest’s
share of equity in the subsidiary. Transactions with non-controlling interests are treated as transactions with equity owners of the
Group. Gains or losses on changes in non-controlling interests without loss of control are recorded in equity.

c. Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Investment in an associate is initially recognised at cost and subsequently accounted for
by the equity method of accounting. The Group’s investment in associates includes goodwill identified on acquisition. The Group’s
share of its associates’ post-acquisition profits or losses is recognised in the consolidated statement of income, and its share of post-
acquisition movements in other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired.
If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate
and its carrying value and recognises the amount in the consolidated statement of income. Upon loss of significant influence over the
associate, the Group measures and recognises any retained investment at its fair value. Gain or loss on this transaction is computed
by comparing the carrying amount of the associate at the time of loss of significant influence with the aggregate of fair value of the
retained investment and proceeds from disposal. This is recognised in the consolidated statement of income.

2.4 Foreign currencies

The consolidated financial statements are presented in Kuwaiti Dinars (thousand) which is also the Bank’s functional currency.

a. Translation of foreign currency transactions

Transactions in foreign currencies are initially recorded in the functional currency rate of exchange ruling at the date of the transaction.
Monetary assets and monetary liabilities in foreign currencies (other than monetary items that form part of the net investment in a
foreign operation) are translated into functional currency at rates of exchange prevailing at the reporting date. Any gains or losses are
taken to the consolidated statement of income. Exchange differences arising on monetary items that form part of the net investment
in a foreign operation are determined using closing rates and recognised in other comprehensive income and presented in the foreign
currency translation reserve in equity. When a foreign operation is disposed of, the cumulative amount in foreign currency translation
reserve relating to that foreign operation is recognised in the consolidated statement of income. Goodwill, intangible assets and any fair
value adjustments to the carrying value of assets and liabilities are recorded at the functional currency of the foreign operation and are
translated to the presentation currency at the rate of exchange prevailing at the reporting date. All resulting exchange differences are
recognised in other comprehensive income and accumulated in foreign currency translation reserve within equity.

Translation gains or losses on non-monetary items are recognised in other comprehensive income when non-monetary items are
measured at fair value through other comprehensive income. Translation gains or losses on non-monetary items measured at fair value
through profit or loss are recognised in consolidated statement of income.

b. Translation of financial statements of foreign entities

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are
translated to presentation currency as follows:

The assets and liabilities are translated at rates of exchange ruling at the reporting date. Income and expense items are translated at
average exchange rates for the year. All resulting exchange differences are recognised in other comprehensive income and accumulated
in foreign currency translation reserve within equity and duly recognised in the consolidated statement of income on disposal of the
foreign operation.

133
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

2 MATERIAL ACCOUNTING POLICIES (continued)

2.5 Interest income and expenses

Interest income and expense for all interest-bearing financial instruments are recognised within ‘interest income’ and ‘interest expense’
in the consolidated statement of income using the effective interest method. The effective interest method is a method of calculating
the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant
period.

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of
the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.
Fees which are considered as an integral part of the effective yield of a financial asset are recognised using effective yield method.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is
recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

2.6 Murabaha and other Islamic financing income

Income from Murabaha, Wakala and Leased assets is recognized on a pattern reflecting a constant periodic return on the outstanding
net investment.

2.7 Fees and commissions income

Fees and commission income are recognised when the Group satisfies the performance obligation by transferring the promised service
to customers. At inception of the contract, the Group determines whether it satisfies the performance obligation over a period of time
or at a point in time. Fees income earned from services provided over a period of time is recognised over the period of service. Fees and
commissions arising from providing a transaction service are recognised at a point in time on completion of the underlying transaction.
Portfolio and other management advisory and service fees are recognised based on the applicable service contracts, usually on a time-
apportioned basis. Asset management fees related to investment funds are recognised over the period in which the service is provided. The
same principle is applied for wealth management and custody services that are continuously provided over an extended period of time.

2.8 Dividend income

Dividend income is recognised when the right to receive payment is established.

2.9 Impairment of financial assets

The Group computes Expected Credit Losses (ECL) on the following financial instruments that are not measured at fair value through
profit or loss:

• loans and advances, Islamic financing to customers including credit commitments

• letters of credit and financial guarantee contracts including commitments
• investment in debt securities measured at amortised cost or FVOCI
• balances and deposits with banks

Equity investments are not subject to ECL.

Impairment of credit facilities

Credit facilities granted by the Group consists of loans and advances, Islamic financing to customers, letters of credit and financial
guarantee contracts and commitments to grant credit facilities. Impairment on credit facilities shall be recognised in the consolidated
statement of financial position at an amount equal to the higher of ECL under IFRS 9 according to the CBK guidelines, or the provisions
required by the CBK instructions.

Impairment of financial assets other than credit facilities

The Group recognises ECL on investment in debt securities measured at amortised cost or FVOCI and on balances and deposits with
banks.

NBK Annual Report 2024

2 MATERIAL ACCOUNTING POLICIES (continued)
2.9 Impairment of financial assets (continued)

Expected Credit Losses

The Group applies a three-stage approach to measure the expected credit loss as follows:

Stage 1: 12 month ECL

The Group measures loss allowances at an amount equal to 12-month ECL on financial assets where there has not been significant
increase in credit risk since their initial recognition or on exposures that are determined to have a low credit risk at the reporting date.
The Group considers a financial asset to have low credit risk when its credit risk rating is equivalent to the globally understood definition
of ‘investment grade’.

Stage 2: Lifetime ECL – not credit impaired

The Group measures loss allowances at an amount equal to lifetime ECL on financial assets where there has been a significant increase
in credit risk since initial recognition but are not credit impaired.

Stage 3: Lifetime ECL – credit impaired

The Group measures loss allowances at an amount equal to lifetime ECL on financial assets that are determined to be credit impaired
based on objective evidence of impairment.

Life time ECL is the ECL that result from all possible default events over the expected life of a financial instrument. The 12 month ECL
is the portion of lifetime expected credit loss that result from default events that are possible within the 12 months after the reporting
date. Both lifetime ECLs and 12 month ECLs are calculated either on an individual basis or on a collective basis depending on the nature
of the underlying portfolio of financial instruments.

Determining the stage of Expected Credit Loss

At each reporting date, the Group assesses whether there has been significant increase in credit risk since initial recognition by
comparing the risk of default occurring over the remaining expected life from the reporting date with the risk of default at the date of
initial recognition. The quantitative criteria used to determine a significant increase in credit risk is a series of relative and absolute
thresholds. All financial assets that are 30 days past due are generally deemed to have significant increase in credit risk since initial
recognition and migrated to stage 2 even if other criteria do not indicate a significant increase in credit risk unless this is rebutted.

At each reporting date, the Group also assesses whether a financial asset or group of financial assets is credit-impaired. The Group
considers a financial asset to be credit impaired when one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred or when contractual payments are 90 days past due. All credit-impaired financial assets are
classified as stage 3 for ECL measurement purposes. Evidence of credit impairment includes observable data about the following:

• Significant financial difficulty of the borrower or issuer

• A breach of contract such as default or past due event
• The lender having granted to the borrower a concession, that the lender would otherwise not consider, for economic or
contractual reasons relating to the borrower’s financial difficulty
• The disappearance of an active market for a security because of financial difficulties
• Purchase of a financial asset at a deep discount that reflects the incurred credit loss

At the reporting date, if the credit risk of a financial asset or group of financial assets has not increased significantly since initial
recognition or not become credit impaired, these financial assets are classified as stage 1.

Measurement of ECLs
ECL is probability weighted estimates of credit losses and are measured as the present value of all cash shortfalls discounted at the
effective interest rate of the financial instrument. Cash shortfall represents the difference between cash flows due to the Group in
accordance with the contract and the cash flows that the Group expects to receive. The key elements in the measurement of ECL
include probability of default (PD), loss given default (LGD) and exposure at default (EAD). The Group estimates these elements using
appropriate credit risk models taking into consideration the internal and external credit ratings of the assets, nature and value of
collaterals, forward-looking macroeconomic scenarios, etc.

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Notes to the Consolidated Financial Statements (continued)

31 December 2024

2 MATERIAL ACCOUNTING POLICIES (continued)

2.9 Impairment of financial assets (continued)
Expected Credit Losses (continued)

Incorporation of forward-looking information

The Group considers key economic variables that are expected to have an impact on the credit risk and the ECL in order to incorporate
forward-looking information into the ECL models. These primarily reflect reasonable and supportable forecasts of the future macro-
economic conditions. The consideration of such factors increases the degree of judgment in determination of ECL. The management
reviews the methodologies and assumptions including any forecasts of future economic conditions on regular basis.

Modification of loans and Islamic financing to customers

Under certain circumstances, the Group seeks to restructure loans, advances and Islamic financing to customers rather than taking
possession of collateral. This may involve extending the payment arrangements, reduction in the amount of principal or interest and the
agreement of new loan or financing conditions. If the modifications are substantial, such a facility is derecognised and a new facility is
recognised with substantially different terms and conditions. The facility will have a loss allowance measured based on 12 month ECL
except in rare occasions where the new facility is considered to be originated and credit impaired. Management continuously reviews
modified loans and islamic financing to customers to ensure that all criteria are met and that future payments are likely to occur.
Management also assesses whether there has been significant increase in credit risk or the facility should be classified in stage 3.
When loans, advances and Islamic financing to customers have been modified but not derecognised, any impairment is measured using
the original effective interest rate as calculated before the modification of terms.

Write off
The gross carrying amount of a financial asset is written off (either partially or in full) when the Group determines that the debtor does
not have assets or sources of income that could generate sufficient cash flows to repay the amounts. However, financial assets that are
written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

Presentation of allowance for ECL in the consolidated statement of financial position

Loss allowances for ECL are presented as a deduction from the gross carrying amount of the financial assets for financial assets carried
at amortised cost. In the case of debt instruments measured at FVOCI, the Group recognises the ECL charge in the consolidated
statement of income and a corresponding amount is recognised in other comprehensive income with no reduction in the carrying
amount of the financial asset in the consolidated statement of financial position. ECL for loan commitments, letters of credit and
financial guarantee contracts are recognised in other liabilities. When the Group is unable to identify the ECL on the undrawn portion of
credit commitments separately from drawn portion of commitments, the combined amount of ECL is presented as a deduction from
the gross carrying amount of the drawn portion. Refer Note 28.1.1Assessment of Expected Credit Losses.

Provisions for credit losses in accordance with CBK instructions

The Group is required to calculate provisions for credit losses on credit facilities in accordance with the instructions of CBK on the
classification of credit facilities and calculation of provisions. Credit facilities are classified as past due when a payment has not been
received on its contractual payment date or if the facility is in excess of pre-approved limits. A credit facility is classified as past due and
impaired when the interest/profit or a principal instalment is past due for more than 90 days and if the carrying amount of the facility is
greater than its estimated recoverable value. Past due but not impaired and past due and impaired loans are managed and monitored
as irregular facilities and are classified into the following four categories which are then used to determine the provisions.

Category Criteria Specific provisions

Watch list Irregular for a period of up to 90 days -
Substandard Irregular for a period of 91- 180 days 20%
Doubtful Irregular for a period of 181- 365 days 50%
Bad Irregular for a period exceeding 365 days 100%

The Group may also include a credit facility in one of the above categories based on management’s judgement of a customer’s financial
and/or non-financial circumstances.

In addition to specific provisions, minimum general provisions of 1% on cash facilities and 0.5% on non-cash facilities are made on all
applicable credit facilities (net of certain restricted categories of collateral) which are not subject to specific provisioning.

NBK Annual Report 2024

2 MATERIAL ACCOUNTING POLICIES (continued)

2.10 Impairment of non-financial assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised in the consolidated statement of income for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use. Refer Note 15 Goodwill and other intangible assets for more details on assessment of value in use. If previously recognised
impairment losses have decreased, such excess impairment provision is reversed in the consolidated statement of income for non-
financial assets other than goodwill.

2.11 Share based compensation

Cash settled share based compensation
The fair value of the employee services received in exchange for the cash settled share based payment is recognised as an expense,
together with a corresponding increase in liability. The total amount to be expensed over the vesting period is determined by reference
to the fair value of the options determined using the Black Scholes model. The liability is remeasured to fair value at each reporting date
up to and including the settlement date, with changes in fair value recognised in the consolidated statement of income.

2.12 Post-employment benefits

The Group is liable to make defined contributions to State plans and lump sum payments under defined benefit plans to employees
at cessation of employment, in accordance with the laws of the place they are employed. The defined benefit plans are unfunded. The
present value of the defined benefit obligation is determined annually by actuarial valuations using the projected unit credit method.
An actuarial valuation involves making various assumptions such as determination of the discount rate, future salary increases and
mortality rates. These assumptions are reviewed at each reporting date. Current service cost, past service cost and net interest expense
on the defined benefit plans are recognized in consolidated statement of income and is included in staff expenses. Any gains or losses
on re-measurement of defined benefit plans attributable to changes in actuarial assumptions are recognized in other comprehensive
income and is included in Actuarial Valuation reserve.

2.13 Taxation
National Labour Support Tax, Zakat, Contribution to Kuwait Foundation for the Advancement of Sciences
National Labour Support Tax and Zakat are provided for in accordance with the applicable fiscal laws, rules and regulations.
Contribution to Kuwait Foundation for the Advancement of Sciences is provided at 1% of the eligible profits in accordance with the
Amiri Decree issued on 12 December 1976.

Overseas tax
Income tax payable on taxable profit (‘current tax’) is recognised as an expense in the period in which the profits arise in accordance
with the fiscal regulations of the respective countries in which the Group operates. Deferred tax assets are recognised for deductible
temporary differences, carry forward of unused tax credits and unused tax losses, to the extent it is probable that taxable profit will be
available to utilise these. Deferred tax liabilities are recognised for taxable temporary differences. Deferred tax assets and liabilities are
measured using tax rates and applicable legislation enacted at the reporting date. Deferred tax assets are included in other assets and
deferred tax liabilities are included in other liabilities in the consolidated statement of financial position.

International Tax Reform – Pillar Two Model Rules

Income taxes arising from tax law enacted or substantively enacted to implement the Pillar II (Minimum tax) model rules published by
the OECD Base Erosion and Profit Shifting sets out a top-up tax liability calculation based on the principles in the Pillar II model rules
which describes tax law that implements qualified domestic minimum top-up taxes. IASB have issued a series of amendments to IAS
12 “Income Taxes”. In periods in which Pillar Two legislation is enacted or substantively enacted but not yet in effect, the Group shall
disclose known or reasonably estimable information that helps users of financial statements understand the entity’s exposure to
Pillar Two income taxes arising from that legislation. In accordance with the provisions of these amendments, the Group applies the
mandatory and temporary exception not to recognise deferred taxes associated with this additional taxation. Refer note 9 for further
information.

137
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

2 MATERIAL ACCOUNTING POLICIES (continued)

2.14 Recognition of financial assets and financial liabilities

Financial assets and financial liabilities are recognised when the Group becomes party to contractual provisions of the instrument and
are initially measured at fair value. Transaction costs are included only for those financial instruments that are not measured at fair
value through profit or loss.

2.15 Classification and measurement of financial assets

The Group determines the classification of financial assets based on the business model it uses to manage the financial assets and the
contractual cash flow characteristics of the financial assets.

Business model assessment

The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve its
business objective. The Group’s business model is not assessed on an instrument by instrument basis but at a higher level of
aggregated portfolios and is based on a number of observable factors. The information considered includes:

• The stated policies and objectives for the portfolio and the operation of those policies in practice
• The risks that affect the performance of the business model (and the financial assets held within that business model) and how
those risks are managed;
• The frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity.
The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into
account. If cash flows after initial recognition are realised in a way that is different from the Group’s original expectations, the Group
does not change the classification of the remaining financial assets held in that business model, but incorporates such information
when assessing newly originated or newly purchased financial assets going forward.

Assessment of whether contractual cash flows are solely payments of principal and interest (SPPI test)
The Group assesses the contractual terms of financial assets to identify whether they meet the SPPI test. ‘Principal’ for the purpose
of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset.
Interest is defined as consideration for time value of money and for the credit risk associated with the principal and for other basic
lending risks and costs as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal
and interest, the Group considers whether the financial asset contains a contractual term that could change the timing or amount of
contractual cash flows such that it would not meet this condition. The Group considers:

• Contingent events that would change the amount and timing of cash flows;
• Leverage features;
• Prepayment and extension terms;
• Terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse asset arrangements);
• Features that modify consideration of the time value of money – e.g. periodical reset of interest rates.

Contractual terms that introduce a more than de minimus exposure to risks or volatility in the contractual cash flows that are unrelated
to a basic lending arrangement do not give rise to contractual cash flows that are solely payment of principal and interest. In such
cases, the financial asset is measured at fair value through profit or loss.

The Group classifies its financial assets upon initial recognition into the following categories:

• Financial assets carried at amortised cost

• Financial assets carried at fair value through other comprehensive income (FVOCI)
• Financial assets carried at fair value through profit or loss (FVTPL)

Financial assets carried at amortized cost:

A financial asset is carried at amortised cost if it meets both of the following conditions:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows ; and
• its contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal
amount outstanding

NBK Annual Report 2024

2 MATERIAL ACCOUNTING POLICIES (continued)
2.15 Classification and measurement of financial assets (continued)

Financial assets carried at amortised cost are subsequently measured at amortised cost using the effective interest method. Interest
income, foreign exchange gains and losses and charge for expected credit losses are recognised in the consolidated statement of
income. Any gain or loss on de-recognition is recognised in the consolidated statement of income.

Financial assets carried at fair value through other comprehensive income (FVOCI):

(i) Debt Securities at FVOCI

A debt security is carried at FVOCI if it meets both of the following conditions:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding

Debt Securities at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign
exchange gains and losses and impairment losses are recognised in the consolidated statement of income. Fair value changes which are
not part of an effective hedging relationship are recognised in other comprehensive income and presented in the cumulative changes in fair
values as part of equity until the asset is derecognised or reclassified. When the financial asset is derecognised, the cumulative gain or loss
previously recognised in other comprehensive income is reclassified from equity to the consolidated statement of income.

(ii) Equity investments at FVOCI

Upon initial recognition, the Group makes an irrevocable election to classify some of its equity investments as equity investments
at FVOCI if they meet the definition of Equity under IAS 32 Financial Instruments: Presentation and are not held for trading. Such
classification is determined on an instrument by instrument basis. Equity investments at FVOCI are subsequently measured at fair
value. Changes in fair values including foreign exchange component are recognised in other comprehensive income and presented
in the cumulative changes in fair values as part of equity. Cumulative gains and losses previously recognised in other comprehensive
income are transferred to retained earnings on de-recognition and are not recognised in the consolidated statement of income.
Dividend income on equity investments at FVOCI are recognised in the consolidated statement of income unless they clearly represent
a recovery of part of the cost of the investment. Equity investments at FVOCI are not subject to impairment assessment.

Financial assets carried at fair value through profit or loss:

Financial assets in this category are those assets which have been either designated by management upon initial recognition or are
mandatorily required to be measured at fair value under IFRS 9. Management designates an instrument as FVTPL that otherwise meet
the requirements to be measured at amortised cost or at FVOCI only if it eliminates, or significantly reduces, an accounting mismatch
that would otherwise arise. Financial assets with contractual cash flows not representing solely payment of principal and interest are
mandatorily required to be measured at FVTPL.

Financial assets at FVTPL are subsequently measured at fair value. Changes in fair value are recognised in the consolidated statement
of income. Interest income is recognised using the effective interest method. Dividend income from equity investments measured at
FVTPL is recognised in the consolidated statement of income when the right to the payment has been established.

The Group’s financial assets are classified and measured as follows:

Cash and short term funds

Cash and short term funds consist of cash in hand, current account and money at call with other banks and deposits with banks
maturing within seven days. Cash and short term funds are classified and carried at amortised cost using effective interest rate.

Deposits with banks

Deposits with banks are classified and carried at amortised cost using the effective interest method. The carrying values of such assets
which are being effectively hedged for changes in fair value are adjusted to the extent of the changes in fair value attributable to the risk
being hedged.

Loans and advances to customers

Loans and advances are stated at amortised cost using the effective interest method. The carrying values of such assets which are being
effectively hedged for changes in fair value are adjusted to the extent of the changes in fair value attributable to the risk being hedged.

139
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

2 MATERIAL ACCOUNTING POLICIES (continued)

2.15 Classification and measurement of financial assets (continued)

Islamic financing to customers

Islamic financing to customers are financial assets with fixed or determinable payments that are not quoted in an active market. Major
islamic financing products are:

a. Murabaha
Murabaha is an agreement relating to the sale of commodities at cost plus an agreed upon profit margin, whereby the seller informs
the buyer of the price at which the deal will be completed and also the amount of profit to be recognized. Murabaha is a financial asset
originated by the Group and is stated at amortised cost.

b. Wakala
Wakala is an agreement involving Al-Muwakkil (the Principal) who wishes to appoint Al-Wakil (the Agent) to be his agent with respect to
the investment of Al-Muwakkil’s fund, in accordance with regulations of the Islamic Sharia’a. Wakala is a financial asset originated by the
Group and stated at amortised cost.

c. Leased assets - the Group as a lessor

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to
the lessee. All other leases are classified as operating lease. Leased assets are stated at amortised cost.

Financial investments
Group’s financial investments consist of debt securities, equity investments and other investments.

Debt securities are classified as either at amortised cost or at fair value through other comprehensive income based on the business model
in which these securities are managed. Debt securities are classified at fair value through profit or loss, if they do not meet SPPI criteria.

Equity investments are generally carried at fair value through profit or loss except for those specific investments for which the Group
has made an election to classify at fair value through other comprehensive income.

Other investments are carried at fair value through profit or loss.

2.16 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date in the principal or, in its absence, in the most advantageous market to which the Group has
access at that date under current market conditions regardless of whether that price is directly observable or estimated using another
valuation technique.

When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A
market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing
information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that include the use of valuation models
that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique
incorporates all of the factors that market participants would take into account in pricing a transaction. The inputs to these models
are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values.
Judgements and estimates include considerations of liquidity and model inputs related to items such as credit risk (both own and
counterparty), funding value adjustments, correlation and volatility.

If an asset or liability measured at fair value has a bid price and an ask price, then the Group measures assets at a bid price and
liabilities at an ask price.

Fair values of investment properties are determined by appraisers having an appropriate recognised professional qualification and
recent experience in the location and category of the property being valued and also considering the ability to generate economic
benefits by using the property in its highest and best use.
NBK Annual Report 2024
2 MATERIAL ACCOUNTING POLICIES (continued)

2.17 Repurchase and resale agreements

Assets sold with a simultaneous commitment to repurchase at a specified future date at an agreed price (repos) are not derecognised
in the consolidated statement of financial position. Amounts received under these agreements are treated as interest bearing
liabilities and the difference between the sale and repurchase price treated as interest expense using the effective yield method. Assets
purchased with a corresponding commitment to resell at a specified future date at an agreed price (reverse repos) are not recognised in
the consolidated statement of financial position. Amounts paid under these agreements are treated as interest earning assets and the
difference between the purchase and resale price treated as interest income using the effective yield method.

2.18 Offsetting of financial assets and liabilities

Financial assets and financial liabilities are only offset and the net amount reported in the consolidated statement of financial position
when there is a legally enforceable right to set off the recognised amounts and the Group intends to either settle on a net basis, or to
realise the asset and settle the liability simultaneously.

2.19 Modification of financial assets and and financial liabilities

If the terms of a financial asset are modified, the Group evaluates whether the cash flows of the modified asset are substantially
different. If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are
deemed to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value.

If the cash flows of the modified asset are not substantially different, then the modification does not result in derecognition of the
financial asset. In this case, the Group recalculates the gross carrying amount of the financial asset using the original effective interest
rate and recognises the amount arising from adjusting the gross carrying amount as modification gain or loss in the Consolidated
Statement of Income.

The Group derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially
different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between
the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in the
Consolidated Statement of Income.

Interest Rate Benchmark Reform

In the context of IBOR reform, the Group’s assessment of whether a change to a financial asset or financial liability is substantial is
made after applying the practical expedient introduced by Interest Rate Benchmark Reform, Amendments to IFRS 9, Phase 2. This
practical expedient allows changes to the basis for determining contractual cash flows as a direct result of interest rate benchmark
reform to be treated as changes to a floating interest rate to that instrument, if the transition from the IBOR benchmark rate to the
alternative RFR takes place on an economically equivalent basis. In such cases, the Group updates the effective interest rate to reflect
the change in an interest rate benchmark from IBOR to Risk Free Rate (RFR) without adjusting the carrying amount.

When additional changes are made, which are not economically equivalent, the Group applies accounting policy on accounting for
modification of financial assets and financial liabilities.

2.20 De-recognition of financial assets and and financial liabilities

Financial assets
A financial asset (or where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where:

• the rights to receive cash flows from the asset have expired, or
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material
delay to a third party under a ‘pass through’ arrangement, or
• the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks
and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.

141
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

2 MATERIAL ACCOUNTING POLICIES (continued)

2.20 De-recognition of financial assets and and financial liabilities (continued)
Financial assets (continued)

When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all
the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing
involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Where an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability.

2.21 Derivative financial instruments and hedge accounting

The Group deals in interest rate swaps to manage its interest rate risk on interest bearing assets and liabilities. Similarly the Group deals
in forward foreign exchange contracts for customers and to manage its foreign currency positions and cash flows. All derivative financial
instruments of the Group are recorded in the consolidated statement of financial position at fair value. The fair value of a derivative is the
equivalent of the unrealised gain or loss from marking to market the derivative using prevailing market rates or internal pricing models.
Positive and negative fair values are reported as assets and liabilities respectively and are offset when there is both an intention to settle
net and a legal right to offset exists.

For the purposes of hedge accounting, hedges are classified into two categories: (a) fair value hedges which hedge the exposure to changes
in the fair value of a recognised asset or liability and (b) cash flow hedges which hedge exposure to variability in cash flows that is either
attributable to a particular risk associated with a recognised financial asset or liability or a highly probable forecast transaction.

In relation to fair value hedges which meet the conditions for hedge accounting, any gain or loss from remeasuring the hedging instrument
is recognised immediately in the consolidated statement of income. The carrying amounts of hedged items are adjusted for fair value
changes attributable to the risk being hedged and the difference is recognised in the consolidated statement of income.

In relation to cash flow hedges which meet the conditions for hedge accounting, the portion of the gain or loss on the hedging instrument
that is determined to be an effective hedge is recognised initially in equity and any ineffective portion is recognised in the consolidated
statement of income. The gains or losses on cash flow hedges recognised initially in equity are transferred to the consolidated statement
of income in the period in which the hedged transaction impacts the consolidated statement of income. Where the hedged transaction
results in the recognition of an asset or liability, the associated gains or losses that had initially been recognised in equity are included in
the initial measurement of the cost of the related asset or liability. For hedges that do not qualify for hedge accounting, any gains or losses
arising from changes in fair value of the hedging instrument are taken directly to the consolidated statement of income.

Hedges of net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment,
are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the
hedge are recognised as other comprehensive income while any gains or losses relating to the ineffective portion are recognised in the
consolidated income statement. On disposal of the foreign operation, the cumulative value of any such gains or losses recorded in equity is
transferred to the consolidated income statement.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, no longer qualifies for hedge
accounting or is revoked by the Group. For cash flow hedges, any cumulative gain or loss on the hedging instrument recognised in equity
remains in equity until the forecast transaction occurs. In the case of fair value hedges of interest bearing financial instruments, any
adjustment relating to the hedge is amortised over the remaining term to maturity. Where the hedged transaction is no longer expected
to occur, the net cumulative gain or loss recognised in equity is transferred to the consolidated statement of income.

Based on the Amendments to IFRS 7 and IFRS 9 “Interest Rate Benchmark reforms : “Phase 2” issued in August 2020, the Group has
availed reliefs that allow the Group’s hedging relationships to continue upon the replacement of an existing interest rate benchmark
rate with an RFR. The relief requires the Group to amend hedge designations and hedge documentation. This includes redefining the
hedged risk to reference an RFR, redefining the description of the hedging instrument and / or the hedged item to reference the RFR
and amending the method for assessing hedge effectiveness. Updates to the hedging documentation must be made by the end of the
reporting period in which a replacement takes place.
NBK Annual Report 2024
2 MATERIAL ACCOUNTING POLICIES (continued)

2.22 Trade and settlement date accounting

All “regular way” purchase and sale of financial assets other than investments in equity instruments are recognised on the settlement
date, i.e. the date the asset is delivered to the Group. Investments in equity instruments are recognised on the trade date, i.e. the date
that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that
require delivery of assets within the time frame generally established by the regulation or convention in the market place.

2.23 Investment properties

Investment properties are properties held either to earn rental income or for capital appreciation or for both, but not for sale in the
ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is
measured at cost on initial recognition and subsequently at fair value with any change therein recognised in consolidated statement of
income. Cost includes expenditure that is directly attributable to the acquisition of the investment property. Fair values of investment
properties are determined by appraisers having an appropriate recognised professional qualification and recent experience in the
location and category of the property being valued. Any gain or loss on disposal of an investment property (calculated as the difference
between the net proceeds from disposal and the carrying amount of the item) is recognised in consolidated statement of income. When
the use of a property changes such that it is reclassified as Land, premises and equipment, its fair value at the date of reclassification
becomes its cost for subsequent accounting. The Group presents investment properties in other assets in the consolidated statement
of financial position.

2.24 Land, premises and equipment

Land and premises comprise mainly branches and offices. All premises and equipment are stated at historical cost less depreciation.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Projects and work in progress are stated at cost less impairment if any. Costs are those expenses incurred by the Group that are directly
attributable to the creation of the asset. When the asset is ready for use, capital work in progress is transferred to the appropriate
category and depreciated in accordance with the Group’s policies.

Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the consolidated statement of income during the period in which they are
incurred.

Land is not depreciated. Depreciation is provided on the depreciable amount of other items of premises and equipment on a straight
line basis over their estimated useful life. The depreciable amount is the gross carrying value, less the estimated residual value at the
end of its useful life. The estimated useful life of premises and equipment are as follows:

Building on leasehold land term of lease (maximum 20 years)

Building on freehold land 50 years
IT systems and equipment 3-10 years

Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each reporting date. The carrying values of land,
premises and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not
be recoverable. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in
the consolidated statement of income.

2.25 Leases
At inception of a contract, the Group assesses whether the contract is a lease. A contract is a lease if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for a consideration. If the contract is identified as a lease, the
Group recognises a right-of-use asset and a lease liability at the lease commencement date. The Group elected to use the recognition
exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and lease contracts for which
the underlying asset is of low value.

143
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

2 MATERIAL ACCOUNTING POLICIES (continued)

2.25 Leases (continued)

Right-of-use assets
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred. The right-of-use asset is subsequently
depreciated using the straight-line method over the lease term. In addition, the right-of-use asset is periodically reduced by impairment
losses, if any. The Group presents right-of-use assets in ‘land, premises and equipment’ in the consolidated statement of financial
position.

Lease Liabilities
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the Group’s incremental borrowing rate. The lease liability is subsequently measured at amortised cost using the
effective interest method. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the
lease term, or a change in the lease payments. The Group presents lease liabilities in ‘other liabilities’ in the consolidated statement of
financial position.

Based on the Amendments to IFRS 16 “Covid-19 Related Rent Concessions” issued in May 2020, the Group has elected not to follow
lease modification accounting in respect of Covid-19 related rent concessions obtained from its lessors until 30 June 2023. Instead
such rent concessions are accounted in the same way as if they were not a lease modification.

2.26 Business combinations

Business combinations are accounted for using the acquisition method of accounting. The cost of an acquisition is measured as the
aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the
acquiree. Non-controlling interest in the acquiree is measured at the proportionate share in the recognised amounts of the acquiree’s
identifiable net assets. Other acquisition related costs incurred are expensed and included in other administrative expenses.

If the business combination is achieved in stages, the acquirer’s previously held equity interest in the acquiree is remeasured to fair
value at the acquisition date and included in cost of acquisition. Any resulting gain or loss is recognised in consolidated statement of
income. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date. The excess of the cost of acquisition over the fair value of the identifiable net assets acquired is recorded as goodwill.
If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in
the consolidated statement of income.

2.27 Goodwill and intangible assets

a. Goodwill
Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the acquisition over the net fair
value of the identifiable assets and liabilities acquired. Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate
that the carrying value may be impaired. Goodwill is recorded in the functional currency of the foreign operation and is translated to
the presentation currency at the rate of exchange prevailing at the reporting date. When subsidiaries are sold, the difference between
the selling price and the net assets plus cumulative translation differences and goodwill is recognised in the consolidated statement of
income.

b. Intangible assets
Intangible assets comprise separately identifiable intangible items arising from business combinations. An intangible asset is
recognised only when its cost can be measured reliably and it is probable that the expected future economic benefit will flow to the
Group. Intangible assets are initially measured at cost. The cost of intangible assets acquired in a business combination is their fair
value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation
and any accumulated impairment losses. The useful lives of the intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortised on a straight line basis over the useful economic life of 5 to 15 years and tested for
impairment whenever there is an indication that the intangible asset may be impaired. Intangible assets with indefinite useful lives are
not amortised but tested for impairment annually or whenever there is an indication that the intangible asset may be impaired. If the
carrying value of the intangible asset is more than the recoverable amount, the intangible asset is considered impaired and is written

NBK Annual Report 2024

2 MATERIAL ACCOUNTING POLICIES (continued)
2.27 Goodwill and intangible assets (continued)
b. Intangible assets (continued)

down to its recoverable amount. The excess of carrying value over the recoverable amount is recognised in the consolidated statement
of income. Impairment losses on intangible assets recognised in the consolidated statement of income in previous periods are reversed
when there is an increase in the recoverable amount.

2.28 Property acquired on settlement of debt and repossessed collateral

Property acquired on settlement of debt and repossessed collateral are stated at the lower of the related loans and advances and the
current fair value of such assets. Gains or losses on disposal and revaluation losses are recognised in the consolidated statement of
income. These assets are included in other assets in the consolidated statement of financial position.

2.29 Due to Banks, Deposits from other Financial Institutions, Customer deposits & Certificates of deposit issued
Due to Banks, Deposits from other Financial Institutions, Customer Deposits & Certificates of deposit issued are stated at amortised
cost using effective interest method. The carrying values of such liabilities which are being effectively hedged for changes in fair value
are adjusted to the extent of the changes in fair value being hedged.

2.30 Islamic customer deposits

Islamic customer deposits comprise of Investment accounts and Non-investment accounts.

Investment accounts
Investment accounts may take the form of investment deposits, which are valid for specified periods of time, and are automatically
renewable on maturity for the same period, unless the concerned depositors give written notice to the contrary, or take the form of
investment saving accounts for unspecified periods. In all cases, investment accounts receive a proportion of the profit, bear a share of
loss and are carried at cost plus profit payable.

Non-investment accounts
Non-investment accounts represent, in accordance with Islamic Sharia’a, Qard Hasan from depositors to the Group. These accounts
are neither entitled to profit nor do they bear any risk of loss, as the Group guarantees to pay the related balance. Investing Qard Hasan
is made at the discretion of the Group and the results of such investments are attributable to the shareholders of the Group. Non-
investment accounts are carried at cost.

2.31 Other borrowed funds

Other borrowed funds includes Tier 2 bonds, Global Medium Term Notes, Global Medium Term Sukuk, Medium and short term borrowings.
These are financial liabilities and are initially recognised at their fair value being the issue proceeds net of transaction costs and are
subsequently measured at their amortised cost using the effective interest rate method. The carrying values of such liabilities which are
being effectively hedged for changes in fair value are adjusted to the extent of the changes in fair value being hedged.

2.32 Financial guarantees

In the ordinary course of business, the Group gives financial guarantees, consisting of letters of credit, guarantees and acceptances.
Financial guarantees are initially recognised in the consolidated financial statements at fair value, being the premium received, in other
liabilities. The premium received is recognised in the consolidated statement of income in ‘net fees and commissions’ on a straight
line basis over the life of the guarantee. The guarantee liability is subsequently carried at initial measurement less amortisation. When
a payment under the guarantee is likely to become payable, the present value of the expected net payments less the unamortised
premium is charged to the consolidated statement of income.

2.33 Treasury shares

The Bank’s holding of its own shares are accounted for as treasury shares and are stated at purchase consideration including directly
attributable costs. When the treasury shares are sold, gains are credited to a separate account in equity (treasury share reserve) which is
non distributable. Any realised losses are charged to the same account to the extent of the credit balance on that account. Any excess
losses are charged to retained earnings then to reserves. Gains realised subsequently on the sale of treasury shares are first used to offset
any previously recorded losses in the order of reserves, retained earnings and the treasury share reserve amount. No cash dividends are
distributed on these shares. The issue of bonus shares increases the number of shares proportionately and reduces the average cost per
share without affecting the total cost of treasury shares.

145
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

2 MATERIAL ACCOUNTING POLICIES (continued)

2.34 Contingent liabilities and contingent assets

Contingent liabilities are not recognized in the consolidated financial statements. They are disclosed in the notes to the consolidated financial
statements, unless the possibility of an outflow of resources embodying economic benefits is remote.

Contingent assets are not recognized in the consolidated financial statements but are disclosed when an inflow of economic benefits is probable.

2.35 Fiduciary assets

Assets and related deposits held in trust or in a fiduciary capacity are not treated as assets or liabilities of the Group and accordingly are
not included in the consolidated statement of financial position.

2.36 Significant accounting judgements and estimates

In the process of applying the Group’s accounting policies, management has used judgements and made estimates in determining the
amounts recognised in the consolidated financial statements. The most significant use of judgements and estimates are as follows:

Accounting Judgements
Classification of financial assets
The Group determines the classification of financial assets based on the assessment of the business model within which the assets
are held and assessment of whether the contractual terms of the financial asset are solely payments of principal and interest on the
principal amount outstanding. Judgments are required in determining the business model at an appropriate level that best reflects an
aggregated group or portfolio of assets which are managed together to achieve a particular business objective. The Group also applies
judgment to assess if there is a change in business model in circumstances when the assets with in that business model are realised
differently than the original expectations. Refer Note 2.15 classification of financial assets for more information.

Estimation uncertainty and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Expected Credit Losses on financial assets

The Group estimates Expected Credit Loss (ECL) for all financial assets carried at amortised cost or fair value through other
comprehensive income except for equity instruments.

Significant judgements are required in applying the accounting requirements for measuring ECL, such as:

• Determining criteria for significant increase in credit risk

• Choosing appropriate models and assumptions for measurement of ECL
• Establishing the number and relative weightings of forward-looking scenarios for each type of product/market
and the associated ECL;
• Establishing group of similar financial assets for the purpose of measuring ECL.

Information about significant judgements and estimates made by the Group in the above areas is set out in Note 28.1.1.

Provision for credit losses as per CBK guidelines

The Group reviews its Loans, advances and Islamic financing to customers on a quarterly basis to assess whether a provision for credit
losses should be recorded in the consolidated statement of income. In particular, considerable judgment by management is required
in the estimation of the amount and timing of future cash flows when determining the level of provisions required. Such estimates are
necessarily based on assumptions about several factors involving varying degrees of judgment and uncertainty, and actual results may
differ resulting in future changes to such provisions.

Impairment of goodwill and intangible assets with indefinite useful life

The Group determines whether goodwill and intangible assets with indefinite useful life is impaired at least on an annual basis. This
requires an estimation of the value in use of the cash-generating units to which the goodwill or intangible assets is allocated. Estimating
the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to
choose a suitable discount rate in order to calculate the present value of those cash flows.

NBK Annual Report 2024

2 MATERIAL ACCOUNTING POLICIES (continued)
2.36 Significant accounting judgements and estimates (continued)

Fair values of assets and liabilities including intangibles

Considerable judgment by management is required in the estimation of the fair value of the assets including intangibles with definite
and indefinite useful life, liabilities and contingent liabilities acquired as a result of business combination.

Share based payments

The Group measures the share based payments to employees by reference to the fair value of the relevant equity instruments.
Estimating fair value for share based payment transactions requires determination of the most appropriate valuation model. This
estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share
option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value
for share based payment transactions are disclosed in Note 22.

Valuation of unquoted financial assets

Fair value of unquoted financial assets is determined using valuation techniques including the discounted cash flow model. The inputs
to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required
in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in
assumptions about these factors could affect the reported fair value of financial instruments. The determination of the cash flows and
discount factors requires significant estimation.

Effect of Climate risk on accounting judgments and estimates

The Group makes use of reasonable and supportable information to make accounting judgments and estimates, this includes
information about the observable effects of the physical and transition risks of climate change. Many of the effects arising from climate
change will be longer term in nature, with an inherent level of uncertainty, and have limited effect on accounting judgments and estimates.

2.37 Basis of translation

The United States dollar amounts in the Consolidated Statement of Income, Consolidated Statement of Comprehensive income,
Consolidated Statement of Financial Position and Consolidated Statement of Cash Flows represent supplementary information and
have been translated at a rate of KD 0.3081 per USD which represents the mid-market rate at 31 December 2024.

3 SEGMENTAL ANALYSIS

The Group has six reportable segments as described below. Management treats the operations of these segments separately for the
purposes of decision making, resource allocation and performance assessment.

Consumer Banking
Consumer Banking provides a diversified range of products and services to individuals. The range includes consumer loans, credit
cards, deposits, foreign exchange and other branch related services.

Corporate Banking
Corporate Banking provides a comprehensive product and service offering to business and corporate customers, including lending,
deposits, trade finance, foreign exchange and advisory services.

NBK Wealth
NBK Wealth provides a full range of asset management, custody, brokerage, lending, deposits and other customized and innovative
banking services to high net worth individuals and institutional clients across the Group.

Islamic Banking
Islamic banking represents the financial results of Boubyan Bank K.S.C.P., the Islamic banking subsidiary of the Group.

147
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

3 SEGMENTAL ANALYSIS (continued)

Group Centre
Group Centre includes treasury, investments, and other defined Group activities. Treasury provides a comprehensive range of treasury
services and products to its clients, and is also responsible for the Bank’s liquidity and market risk management. Group Centre
includes any residual in respect of transfer pricing and inter segment allocations.

International Banking
International Banking provides a broad range of products and services including lending, deposits, trade finance etc. to corporate and
individual customers at Group’s overseas locations.

The following table shows net interest income and net income from Islamic financing, net operating income, profit for the year, total
assets and total liabilities information in respect of the Group’s business segments:

2024
Consumer Corporate Islamic Group International
Banking Banking NBK Wealth Banking Centre Banking Total

KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Net interest income and net income

from Islamic financing 203,331 119,767 43,881 208,442 145,307 259,331 980,059

Net operating income 257,583 161,357 117,209 253,437 160,280 301,337 1,251,203

Profit for the year 110,478 122,539 67,867 96,784 92,855 148,037 638,560

Total assets 5,136,394 5,189,288 1,117,917 9,376,568 1,821,573 17,696,416 40,338,156

Total liabilities 5,052,484 2,254,972 2,232,873 8,290,508 1,707,255 15,643,332 35,181,424

2023
Consumer Corporate Islamic Group International
Banking Banking NBK Wealth Banking Centre Banking Total

KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Net interest income and net income

from Islamic financing 182,745 123,688 45,919 180,543 136,760 235,482 905,137

Net operating income 237,974 162,894 112,192 224,424 152,182 277,101 1,166,767

Profit for the year 102,060 145,818 66,667 78,221 58,686 136,921 588,373

Total assets 5,084,225 5,105,296 981,443 8,404,989 1,971,188 16,117,850 37,664,991

Total liabilities 4,869,759 3,229,839 2,169,885 7,376,154 622,634 14,490,145 32,758,416

NBK Annual Report 2024

3 SEGMENTAL ANALYSIS (continued)

Geographic information:
The following table shows the geographic distribution of the Group’s Net operating income for the year and non-current assets based on
the location of the operating entities.

Other Middle East

2024
Kuwait and North Africa Europe & UK Others Total

KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Net operating income 926,471 193,659 78,019 53,054 1,251,203

Non-current assets 1,032,444 41,328 15,851 7,201 1,096,824

Other Middle East

2023
Kuwait and North Africa Europe & UK Others Total

KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Net operating income 867,692 182,146 69,840 47,089 1,166,767

Non-current assets 1,032,503 46,010 14,822 2,993 1,096,328

Non-current assets consist of land, premises and equipment, goodwill and other intangible assets, investment properties and property
acquired on settlement of debts.

4 INTEREST INCOME

2024 2023
KD 000’s KD 000’s
Deposits with banks 209,828 233,519
Loans and advances to customers 1,123,249 979,350
Debt investment securities 422,752 370,889
Kuwait Government treasury bonds and CBK bonds 43,080 48,990

1,798,909 1,632,748

149
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

5 INTEREST EXPENSE

2024 2023
KD 000’s KD 000’s

Due to banks 243,686 202,697

Deposits from other financial institutions 76,210 106,991
Customer deposits 601,302 493,049
Certificates of deposit issued 70,526 82,229
Other borrowed funds 35,568 23,188

1,027,292 908,154

6 NET FEES AND COMMISSIONS

2024 2023
KD 000’s KD 000’s

Fees and commissions income 339,521 300,354

Fees and commissions related expenses (133,838) (103,748)

Net fees and commissions 205,683 196,606

Fees and commissions income includes asset management fees of KD 64,862 thousand (2023: KD 57,732 thousand) earned on trust
and fiduciary activities where the Group holds or invests assets on behalf of its customers.

7 NET INVESTMENT INCOME

2024 2023
KD 000’s KD 000’s

Net realised gain/(loss) on sale of investments 315 (239)

Net gains from investments carried at fair value through profit or loss 18,647 19,130

Dividend income 2,685 2,570

Share of results of associates 347 765

Other investment income 985 5,240

22,979 27,466

NBK Annual Report 2024

8 PROVISION CHARGE FOR CREDIT LOSSES AND IMPAIRMENT LOSSES

2024 2023
KD 000’s KD 000’s

Provision charge for credit losses (Note 13) 87,239 81,765

ECL (release) charge for investment in debt securities (Note 14) (3,003) 2,501

ECL release for other financial assets (1,620) (2,512)

Impairment loss on goodwill - 20,174

Other impairment losses 3,848 1,140

86,464 103,068

9 TAXATION

2024 2023
KD 000’s KD 000’s

National Labour Support Tax 15,095 14,088

Zakat 6,772 6,267

Contribution to Kuwait Foundation for the Advancement of Sciences 6,378 5,911

Overseas tax 29,198 21,831

57,443 48,097

Pillar 2 Income Taxes

In 2021, OECD’s Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS) had agreed to a two-pillar solution in order to
address tax challenges arising from digitalization of the economy. Under Pillar 2, multinational entities (MNE Group) whose revenue
exceeds EUR 750 million are liable to pay corporate income tax at a minimum effective tax rate of 15% in each jurisdiction they operate.
The jurisdictions in which the Group operates including the State of Kuwait have joined the IF. Group’s earnings in certain jurisdictions,
primarily in Kuwait and Bahrain, are currently subject to a lower effective tax rate compared to the proposed global minimum tax.

The State of Kuwait issued Law Number 157 of 2024 on 31 December 2024 (the Law) introducing domestic minimum top-up tax
(DMTT) effective from the year 2025 on entities which are part of MNE Group with annual revenues of EUR 750 million or more. The Law
provides that a top-up tax shall be payable on the taxable income at a rate equal to the difference between 15% and the effective tax
rate of all constituent entities of the MNE Group operating within Kuwait. The taxable income and effective tax rate shall be computed
in accordance with the Executive regulations which will be issued within six months from the date of issue of the Law. The Law
effectively replaces the existing National Labour Support Tax (NLST) and Zakat tax regimes in Kuwait for MNEs within the scope of this
Law. Similar DMTT laws are enacted or announced in low tax jurisdictions such as the Kingdom of Bahrain and United Arab Emirates.
Additionally, some jurisdictions where the Group operates have Pillar 2 legislation in effect in 2024 (e.g., France, Netherlands, United
Kingdom, and Switzerland) and some of those jurisdictions have also adopted the Undertaxed Profits rule (UTPR) whereby undertaxed
profits in any of the Group’s jurisdictions will be brought to an effective global minimum tax rate of 15% starting from the year 2025.

The Group has performed an analysis of its Pillar 2 position for 2024 based on OECD guidelines. The Group doesn’t have any Pillar 2
top up tax exposure for 2024 in jurisdictions where the Pillar 2 legislation is in effect, since the relevant jurisdictions are already paying
tax above the global minimum tax rate. The Group’s effective tax rate is expected to increase significantly in 2025 due to applicability
of the Pillar 2 legislation in low tax jurisdictions such as Kuwait, Bahrain, and UAE. In the absence of Executive Regulations in Kuwait,
the expected impact in 2025 cannot be reasonably estimated at this time. The Group continues to assess the impact of evolving Pillar
2 tax regulations on its future financial performance.

151
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

10 EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit for the year attributable to shareholders of the Bank (adjusted for interest
and profit paid on Perpetual Tier 1 Capital Securities and Sukuk) by the weighted average number of shares outstanding during the year
net of treasury shares. There are no dilutive potential shares that are convertible into shares.

2024 2023
KD 000’s KD 000’s

Profit for the year attributable to shareholders of the Bank 600,122 560,620

Less: Interest paid on Perpetual Tier 1 Capital Securities (18,163) (18,224)

Less: Profit distribution on Perpetual Tier 1 Sukuk by a subsidiary

attributable to shareholders of the Bank (3,652) (3,664)

578,307 538,732

Weighted average number of shares outstanding during the year net of treasury shares (thousand) 8,326,443 8,326,443

Basic earnings per share 69 Fils 65 Fils

Earnings per share calculations for 2023 have been adjusted to take account of the bonus shares issued in 2024. Refer Note 19a.

11 CASH AND SHORT TERM FUNDS

2024 2023
KD 000’s KD 000’s

Cash on hand 176,163 165,937

Current account with other banks 2,145,739 1,525,474

Money at call 627,022 635,106

Balances and deposits with the Central Bank of Kuwait 1,850,141 1,526,210

Deposits and Murabaha with banks maturing within seven days 551,533 560,352

5,350,598 4,413,079

Expected credit losses (27,325) (28,379)

5,323,273 4,384,700

12 DEPOSITS WITH BANKS

2024 2023
KD 000’s KD 000’s

Deposits with the Central Bank of Kuwait 60,258 115,969

Deposits with other banks 1,323,610 1,203,256

1,383,868 1,319,225

Expected credit losses (538) (1,104)

1,383,330 1,318,121

NBK Annual Report 2024

13 LOANS, ADVANCES AND ISLAMIC FINANCING TO CUSTOMERS

Middle
East and North
2024
North Africa America Europe & UK Asia Others Total
KD 000’s KD 000’s   KD 000’s   KD 000’s   KD 000’s   KD 000’s
Corporate 12,328,016 683,265 2,473,085 705,462 487,354 16,677,182
Retail 7,889,402 - 5,361 - - 7,894,763
Loans, advances and Islamic
financing to customers 20,217,418 683,265 2,478,446 705,462 487,354 24,571,945
Provision for credit losses (864,336)
23,707,609

Middle
East and North
2023
North Africa America Europe & UK Asia Others Total
KD 000’s KD 000’s   KD 000’s   KD 000’s   KD 000’s   KD 000’s
Corporate 11,807,679 606,107 1,912,542 658,681 436,341 15,421,350
Retail 7,718,323 - 4,181 - - 7,722,504
Loans, advances and Islamic
financing to customers 19,526,002 606,107 1,916,723 658,681 436,341 23,143,854
Provision for credit losses (862,850)
22,281,004

In March 2007, the Central Bank of Kuwait issued a circular amending the basis of making general provisions on facilities changing the
minimum rate from 2% to 1% for cash facilities and 0.5% for non-cash facilities. The required rates were effective from 1 January 2007
on the net increase in facilities, net of certain restricted categories of collateral, during the reporting period. Pending further directive
from the Central Bank of Kuwait, the general provision in excess of 1% for cash facilities and 0.5% for non-cash facilities was retained
as general provision.

153
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

13 LOANS, ADVANCES AND ISLAMIC FINANCING TO CUSTOMERS (continued)

Provisions for credit losses on cash facilities are as follows:

Specific General Total

2024 2023 2024 2023 2024 2023

KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Balance at beginning of the year 165,273 167,921 697,577 660,020 862,850 827,941

Provided during the year 63,573 45,052 18,168 36,519 81,741 81,571

Transfer 40,810 - (40,810) - - -

Amounts (written off) recovered net of exchange

movements (80,168) (47,700) (87) 1,038 (80,255) (46,662)

Balance at end of the year 189,488 165,273 674,848 697,577 864,336 862,850

Further analysis of specific provision based on class of financial asset is given below:

Corporate Retail Total

2024 2023 2024 2023 2024 2023

KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Balance at beginning of the year 63,065 72,002 102,208 95,919 165,273 167,921

Provided during the year 25,621 12,955 37,952 32,097 63,573 45,052

Transfer 40,810 - - - 40,810 -

Amounts written off net of exchange

movements (53,992) (21,892) (26,176) (25,808) (80,168) (47,700)

Balance at end of the year 75,504 63,065 113,984 102,208 189,488 165,273

NBK Annual Report 2024

13 LOANS, ADVANCES AND ISLAMIC FINANCING TO CUSTOMERS (continued)

Analysis of total provision charge (release) for credit losses is given below:

Specific General Total

2024 2023 2024 2023 2024 2023

KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Cash facilities 63,573 45,052 18,168 36,519 81,741 81,571

Non cash facilities 1,480 (507) 4,018 701 5,498 194

Provision charge for credit losses 65,053 44,545 22,186 37,220 87,239 81,765

Non-performing loans, advances and Islamic financing to customers and related provisions are as follows:

2024 2023
KD 000’s KD 000’s

Loans, advances and Islamic financing to customers 329,120 318,386

Provisions 175,926 159,150

The fair value of collateral that the Group holds relating to loans, advances and Islamic financing to customers individually determined to
be non-performing at 31 December 2024 amounts to KD 179,304 thousand (2023: KD 172,260 thousand). The collateral consists of cash,
securities, bank guarantees and properties.

The available provision on non-cash facilities of KD 45,878 thousand (2023: KD 40,540 thousand) is included under other liabilities (Note
18). The total provision for cash and non cash credit facilities in accordance with CBK guidelines amounted to KD 910,214 thousand as at
31 December 2024 (31 December 2023: KD 903,390 thousand).

The Expected Credit Losses (“ECL”) on credit facilities determined under IFRS 9 in accordance to the CBK guidelines amounted to
KD 634,365 thousand as at 31 December 2024 (2023: KD 615,659 thousand). CBK guidelines prescribe certain parameters to determine
the ECL on credit facilities such as floors for estimating Probability of Default (PD), eligible collateral with haircuts for determining Loss
Given Default (LGD), deemed minimum maturity for Stage 2 exposures, 100% credit conversion factors for utilised cash and non-cash
facilities, Stage 3 ECLs at 100% of the defaulted exposure net of eligible collateral after applying applicable haircuts etc.

155
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

13 LOANS, ADVANCES AND ISLAMIC FINANCING TO CUSTOMERS (continued)

An analysis of the carrying amounts of credit facilities by credit quality, and the corresponding ECL based on the staging criteria under IFRS
9 in accordance to the CBK guidelines is as follows:

Stage 1 Stage 2 Stage 3 Total

2024 KD 000’s KD 000’s KD 000’s KD 000’s

High 20,184,691 551,029 - 20,735,720

Standard 2,529,588 977,517 - 3,507,105

Impaired - - 329,120 329,120

Loans, advances and Islamic financing to customers 22,714,279 1,528,546 329,120 24,571,945

Contingent liabilities (Note 25) 4,582,272 801,560 13,551 5,397,383

Commitments (revocable and irrevocable) to extend credit 9,125,227 896,624 429 10,022,280

ECL allowance for credit facilities 176,315 199,369 258,681 634,365

Stage 1 Stage 2 Stage 3 Total

2023 KD 000’s KD 000’s KD 000’s KD 000’s

High 19,239,616 780,821 - 20,020,437

Standard 2,099,895 705,136 - 2,805,031

Impaired - - 318,386 318,386

Loans, advances and Islamic financing to customers 21,339,511 1,485,957 318,386 23,143,854

Contingent liabilities (Note 25) 3,895,079 708,129 12,703 4,615,911

Commitments (revocable and irrevocable) to extend credit 8,046,514 1,010,524 1,175 9,058,213

ECL allowance for credit facilities 195,114 174,258 246,287 615,659

NBK Annual Report 2024

13 LOANS, ADVANCES AND ISLAMIC FINANCING TO CUSTOMERS (continued)

Ageing analysis of past due or impaired Loans, advances and Islamic financing to customers:

Corporate Retail Total

Past due and Past due and Past due and
not impaired Impaired not impaired Impaired not impaired Impaired
KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s
2024
Up to 30 days 29,619 16,970 43,169 345 72,788 17,315
31 - 60 days 1,081 1,792 28,616 130 29,697 1,922
61 - 90 days 2,221 - 5,315 68 7,536 68
91-180 days - 34,771 - 28,201 - 62,972
More than 180 days - 132,664 - 114,179 - 246,843
32,921 186,197 77,100 142,923 110,021 329,120

Corporate Retail Total

Past due and Past due and Past due and
not impaired Impaired not impaired Impaired not impaired Impaired
KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s
2023
Up to 30 days 13,145 7,773 39,738 746 52,883 8,519
31 - 60 days 8,477 - 22,172 120 30,649 120
61 - 90 days 3,112 - 6,148 89 9,260 89
91-180 days - 26,525 - 27,681 - 54,206
More than 180 days - 147,442 - 108,010 - 255,452
24,734 181,740 68,058 136,646 92,792 318,386

Of the aggregate amount of gross past due or impaired loans, advances and Islamic financing to customers, the fair value of collateral that
the Group held as at 31 December 2024 was KD 259,665 thousand (2023: KD 227,510 thousand).

157
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

13 LOANS, ADVANCES AND ISLAMIC FINANCING TO CUSTOMERS (continued)

An analysis of the changes in the ECL in relation to credit facilities (cash and non-cash facilities) computed under IFRS 9 in accordance to
the CBK guidelines is as follows:

Stage 1 Stage 2 Stage 3 Total

KD 000’s KD 000’s KD 000’s KD 000’s

ECL allowance as at 1 January 2024 195,114 174,258 246,287 615,659

Transfer between stages

Transfer from Stage 1 (7,817) 5,728 2,089 -

Transfer from Stage 2 43,818 (55,688) 11,870 -

Transfer from Stage 3 14,631 2,472 (17,103) -

Amounts written off net of exchange movements (3,379) (652) (78,639) (82,670)

Net (decrease) increase in ECL for the year (66,052) 73,251 94,177 101,376

At 31 December 2024 176,315 199,369 258,681 634,365

Stage 1 Stage 2 Stage 3 Total

KD 000’s KD 000’s KD 000’s KD 000’s

ECL allowance as at 1 January 2023 169,351 169,228 238,856 577,435

Transfer between stages

Transfer from Stage 1 (5,100) 3,435 1,665 -

Transfer from Stage 2 34,837 (50,082) 15,245 -

Transfer from Stage 3 12,503 1,858 (14,361) -

Amounts recovered (written off) net of exchange movements 143 232 (46,958) (46,583)

Net (decrease) increase in ECL for the year (16,620) 49,587 51,840 84,807

At 31 December 2023 195,114 174,258 246,287 615,659

NBK Annual Report 2024

14 FINANCIAL INVESTMENTS

The table below provides the details of the categorisation of financial investments:

Fair value
through other Fair value
2024 Amortised comprehensive through profit
cost income or loss Total
KD 000’s KD 000’s KD 000’s KD 000’s
Investment securities
Debt securities - Government (Non Kuwait) 1,115,962 3,260,815 - 4,376,777
Debt securities - Non Government - 2,871,247 19,647 2,890,894
Equities - 40,725 34,390 75,115
Other investments - - 300,536 300,536
1,115,962 6,172,787 354,573 7,643,322
Expected credit losses (16,844) - - (16,844)
1,099,118 6,172,787 354,573 7,626,478
Central Bank of Kuwait bonds 343,652 - - 343,652
Kuwait Government treasury bonds 148,555 - - 148,555
1,591,325 6,172,787 354,573 8,118,685

Fair value
through other Fair value
2023 Amortised comprehensive through profit
cost income or loss Total
KD 000’s KD 000’s KD 000’s KD 000’s
Investment securities
Debt securities - Government (Non Kuwait) 1,073,186 2,959,018 - 4,032,204
Debt securities - Non Government - 2,560,626 17,979 2,578,605
Equities - 40,987 34,767 75,754
Other investments - - 217,184 217,184
1,073,186 5,560,631 269,930 6,903,747
Expected credit losses (18,926) - - (18,926)
1,054,260 5,560,631 269,930 6,884,821
Central Bank of Kuwait bonds 856,815 - - 856,815
Kuwait Government treasury bonds 194,111 - - 194,111
2,105,186 5,560,631 269,930 7,935,747

The Group has classified certain equity investments at fair value through other comprehensive income on the basis that these are not
held for trading. The dividend received on such investments during 2024 was KD 1,472 thousand (2023: KD 1,520 thousand). During
the year, the Group sold FVOCI equity investments with a carrying value of KD 25 thousand (2023: Nil) and the realised loss on sale
amounted to KD 270 thousand (2023: Nil).

159
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

14 FINANCIAL INVESTMENTS (continued)

An analysis of the carrying amounts of investments in debt securities, by credit quality, and the corresponding ECL based on the staging
criteria under IFRS 9 in accordance to the CBK guidelines is as follows:

Stage 1 Stage 2 Stage 3 Total

2024 KD 000’s KD 000’s KD 000’s KD 000’s

High 6,004,772 - - 6,004,772

Standard 1,201,381 41,101 - 1,242,482

Impaired - - 770 770

Investments in debt securities 7,206,153 41,101 770 7,248,024

ECL allowance for debt securities 28,091 3,834 8,296 40,221

Stage 1 Stage 2 Stage 3 Total

2023 KD 000’s KD 000’s KD 000’s KD 000’s

High 5,251,336 - - 5,251,336

Standard 1,154,103 186,920 - 1,341,023

Impaired - - 471 471

Investments in debt securities 6,405,439 186,920 471 6,592,830

ECL allowance for debt securities 16,691 18,228 8,305 43,224

ECL allowance for investments in debt securities as at 31 December 2024 consists of KD 16,844 thousand (2023: KD 18,926 thousand)
in respect of debt securities carried at amortised cost and KD 23,377 thousand (2023: KD 24,298 thousand) in respect of debt
securities carried at fair value through other comprehensive income. Investments in debt securities carried at fair value through profit or
loss are not subject to Expected Credit Losses. Central Bank of Kuwait bonds and Kuwait Government treasury bonds are not subject to
Expected Credit Losses in accordance with CBK guidelines.

NBK Annual Report 2024

14 FINANCIAL INVESTMENTS (continued)

An analysis of changes in the gross carrying amount and the corresponding Expected Credit Losses in relation to Investment in debt
securities are as follows:

Stage 1 Stage 2 Stage 3 Total

2024 KD 000’s KD 000’s KD 000’s KD 000’s

Gross carrying amount as at 1 January 2024 6,405,439 186,920 471 6,592,830

Assets purchased/(de-recognised) during the year -Net 850,703 (146,056) - 704,647

Fair value and exchange movements (49,989) 237 299 (49,453)

At 31 December 2024 7,206,153 41,101 770 7,248,024

Stage 1 Stage 2 Stage 3 Total

2023 KD 000’s KD 000’s KD 000’s KD 000’s

Gross carrying amount as at 1 January 2023 5,126,350 188,078 477 5,314,905

Assets purchased/(de-recognised) during the year -Net 1,198,327 (1,436) - 1,196,891

Fair value and exchange movements 80,762 278 (6) 81,034

At 31 December 2023 6,405,439 186,920 471 6,592,830

There were no transfers between stage 1, stage 2 and stage 3.

161
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

14 FINANCIAL INVESTMENTS (continued)

Stage 1 Stage 2 Stage 3 Total

2024 KD 000’s KD 000’s KD 000’s KD 000’s

ECL allowance as at 1 January 2024 16,691 18,228 8,305 43,224

Impact due to purchase/(de-recognition) 13,110 (12,582) - 528

Re-measurement of ECL (1,710) (1,812) (9) (3,531)

Net charge (release) to consolidated statement of income 11,400 (14,394) (9) (3,003)

At 31 December 2024 28,091 3,834 8,296 40,221

Stage 1 Stage 2 Stage 3 Total

2023 KD 000’s KD 000’s KD 000’s KD 000’s

ECL allowance as at 1 January 2023 16,676 15,778 8,269 40,723

Impact due to purchase/(de-recognition) 2,939 (7) - 2,932

Re-measurement of ECL (2,924) 2,457 36 (431)

Net charge to consolidated statement of income 15 2,450 36 2,501

At 31 December 2023 16,691 18,228 8,305 43,224

NBK Annual Report 2024

15 GOODWILL AND OTHER INTANGIBLE ASSETS

Intangible
Goodwill Assets Total
KD 000’s KD 000’s KD 000’s

Cost

At 1 January 2024 373,772 211,369 585,141

Acquisition of a subsidiary (Note 24) 3,953 - 3,953

Exchange rate adjustments (13,752) (4,065) (17,817)

At 31 December 2024 363,973 207,304 571,277

Accumulated amortisation & impairment

At 1 January 2024 36,592 40,133 76,725

Amortisation charge for the year - 1,647 1,647

Exchange rate adjustments (13,763) (4,065) (17,828)

At 31 December 2024 22,829 37,715 60,544

Net book value

At 31 December 2024 341,144 169,589 510,733

Intangible
Goodwill Assets Total
KD 000’s KD 000’s KD 000’s

Cost

At 1 January 2023 382,252 213,955 596,207

Exchange rate adjustments (8,480) (2,586) (11,066)

At 31 December 2023 373,772 211,369 585,141

Accumulated amortisation & impairment

At 1 January 2023 20,199 41,072 61,271

Amortisation charge for the year - 1,647 1,647

Impairment charge for the year 20,174 - 20,174

Exchange rate adjustments (3,781) (2,586) (6,367)

At 31 December 2023 36,592 40,133 76,725

Net book value

At 31 December 2023 337,180 171,236 508,416

163
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

15 GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

Net book value of goodwill as at 31 December 2024 includes KD 334,531 thousand (2023: KD 334,531 thousand) in respect of Boubyan
Bank K.S.C.P, KD 2,660 thousand (2023: KD 2,649 thousand) in respect of Credit Bank of Iraq S.A and KD 3,953 thousand in respect of
the newly acquired subsidiary, Upayments Company for Electronic Payments and Settlement K.S.C. (Closed). Refer note 24.

Net book value of intangible assets as at 31 December 2024 includes banking licences and brand amounting to KD 158,623 thousand
(2023: KD 158,623 thousand), customer relationships and core deposits amounting to KD 4,256 thousand (2023: KD 5,903 thousand)
and brokerage licences amounting to KD 6,710 thousand (2023: KD 6,710 thousand). Intangible assets with indefinite useful life
amounts to KD 165,333 thousand (2023: KD 165,333 thousand). Intangible assets with definite useful life amounting to KD 4,256
thousand (2023: KD 5,903 thousand) are amortised over a period of 15 years.

Impairment testing for goodwill and intangible assets with indefinite useful life
The carrying value of goodwill and intangible assets with indefinite useful life are tested for impairment on an annual basis (or more
frequently if evidence exists that goodwill or intangible assets might be impaired) by estimating the recoverable amount of the cash
generating unit (CGU) to which these items are allocated using value-in-use calculations unless fair value based on an active market
price is higher than the carrying value of the CGU. The value in use calculations use pre-tax cash flow projections based on financial
budgets approved by management over a five years period and a relevant terminal growth rate. These cash flows are then discounted to
derive a net present value which is compared to the carrying value. The discount rate used is pre-tax and reflects specific risks relating
to the relevant cash generating unit.

Since the fair value less cost of disposal of the Group’s holding in Boubyan Bank K.S.C.P. is higher than its carrying value, there is no
indication that the associated goodwill or intangible assets with indefinite useful life is impaired. Recoverable amount of intangible
assets with indefinite useful life is calculated using value-in-use method. A discount rate of 12% (2023: 13%) and terminal growth rate
of 2.6% (2023: 2.4%) are used to estimate the recoverable amount of the brokerage licence in Kuwait. The Group has also performed
a sensitivity analysis by varying these input factors by a reasonable margin. Based on such analysis, there are no indications that the
remaining goodwill or intangible assets with indefinite useful life are impaired.

16 OTHER ASSETS

2024 2023
KD 000’s KD 000’s

Interest receivable 223,792 203,757

Positive fair value of derivatives (Note 26) 336,064 310,446

Sundry debtors and other receivables 75,564 51,084

Investment in associates 1,367 2,809

Investment properties 68,370 73,521

Properties acquired on settlement of debts 329 7,579

Others 71,648 80,995

777,134 730,191

NBK Annual Report 2024

16 OTHER ASSETS (continued)

The fair value of investment properties was determined by independent valuers who have appropriate qualifications and recent
experience in the valuation of properties in the relevant locations. The fair values were determined based on market approach and
income capitalization approach. In estimating the fair values of the properties, the highest and the best use of the properties is their
current use where price per square meter and annual lease income are the significant inputs. There has been no change to the valuation
techniques during the year. The following table provides the fair value measurement hierarchy of the investment properties:

Level 1 Level 2 Level 3 Total

2024
KD 000’s KD 000’s KD 000’s KD 000’s

Investment properties -     2,161 66,209 68,370

Level 1 Level 2 Level 3 Total

2023
KD 000’s KD 000’s KD 000’s KD 000’s

Investment properties - 2,221 71,300 73,521

The following table shows a reconciliation of the opening and closing amount of level 3 investment properties:

At 31
At 1 January Change in fair Sale/ Exchange rate December
2024 value Additions redemption movements 2024
KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Investment properties 71,300 (2,256) 9,244 (11,489) (590) 66,209

At 31
At 1 January Change in fair Exchange rate December
2023 value Additions Sale movements 2023
KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Investment properties 31,421 1,589 39,045 (1,281) 526 71,300

165
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

17 OTHER BORROWED FUNDS

2024 2023
KD 000’s KD 000’s

Global Medium Term Notes - USD 1,000,000 thousand 307,053 305,338

Global Medium Term Sukuk - USD 750,000 thousand 231,075 230,063

Global Medium Term Sukuk - USD 500,000 thousand 152,434 146,451

Global Medium Term Notes - USD 500,000 thousand 155,579 -

Subordinated Tier 2 bonds - KD 150,000 thousand 149,907 149,800

Subordinated Tier 2 bonds - USD 300,000 thousand 92,372 91,902

Medium and short term borrowing from banks and financial institutions 432,002 407,452

1,520,422 1,331,006

Global Medium-Term senior unsecured notes of USD 1,000,000 thousand were issued on 15 September 2021, under the Bank’s USD
5 billion Global Medium Term Note programme, maturing on 15 September 2027 with first optional redemption date on 15 September
2026. These notes were issued at 99.518 per cent of nominal value and carry a fixed interest rate of 1.625% per annum payable
semi-annually in arrears until the first optional redemption date, followed by a floating rate of SOFR + 105 basis points paid quarterly
thereafter.

Global Medium-Term senior unsecured Sukuk of USD 750,000 thousand were issued by Boubyan Bank K.S.C.P, a subsidiary of the Group
in February 2020, with a tenor of 5 years, issued at par and carry at a fixed profit rate of 2.593% per annum, payable semi-annually in
arrears.

Global Medium-Term senior unsecured Sukuk of USD 500,000 thousand were issued by Boubyan Bank K.S.C.P, a subsidiary of the Group
in March 2022, with a tenor of 5 years, issued at par and carry at a fixed profit rate of 3.389% per annum, payable semi-annually in
arrears.

Global Medium-Term senior unsecured notes of USD 500,000 thousand were issued on 6 June 2024, under the Bank’s USD 5 billion
Global Medium Term Note programme, maturing on 6 June 2030 with first optional redemption date on 6 June 2029. These notes were
issued at 99.905 per cent of nominal value and carry a fixed interest rate of 5.5% per annum payable semi-annually in arrears until the
first optional redemption date, followed by a floating rate of SOFR + 116 basis points paid quarterly thereafter.

Subordinated Tier 2 bonds of KD 150,000 thousand were issued in November 2020 with a tenor of up to 10 years, comprising equal
tranches of fixed rate bonds and floating rate bonds. Fixed rate bonds carry an interest rate of 4.75% per annum for the first five years
and will be reset on the fifth year anniversary of date of issuance. Floating-rate bonds carry an interest rate of 3% per annum over the
CBK discount rate, reset semi-annually, subject to a maximum of 1% over the prevailing rate for the fixed-rate bonds. These bonds
are unsecured and callable in whole or in part at the option of the Bank after 5 years from the date of issuance, subject to certain
conditions and regulatory approvals.

Subordinated Tier 2 bonds of USD 300,000 thousand were issued in November 2020 with a tenor of up to 10 years, carry a fixed rate of
2.5% per annum for the first five years and will be reset on the fifth year anniversary of date of issuance. These bonds are unsecured
and callable in whole or in part at the option of the Bank after 5 years from the date of issuance, subject to certain conditions and
regulatory approvals.

NBK Annual Report 2024

18 OTHER LIABILITIES

2024 2023
KD 000’s KD 000’s

Interest payable 271,823 317,428

Income received in advance 59,094 56,362

Taxation 51,845 56,436

Provision on non-cash facilities (Note 13) 45,878 40,540

Accrued expenses 78,295 82,221

Negative fair value of derivatives (Note 26) 55,985 62,752

Post-employment benefit 60,425 53,257

Lease liabilities 37,957 32,972

Items in transit 128,225 137,033

Others 150,255 127,122

939,782 966,123

Post-Employment Benefit
The present value of defined benefit obligations and the related current and past service cost was determined by actuarial valuations
using the projected unit credit method. The significant inputs used in the actuarial valuation are a discount rate of 5.60% (2023:
5.94%), future salary increases in line with expected consumer price inflation and demographic assumptions of mortality, withdrawal,
retirement and disability rates.

The movement in the post-employment benefit was as follows:

2024 2023
KD 000’s KD 000’s

Balance at 1 January 53,257 54,208

Net charge during the year 11,568 9,981

Paid during the year (6,370) (6,963)

Actuarial loss (gain) in respect of defined benefit plans 1,970 (3,969)

Balance at 31 December 60,425 53,257

167
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

19 SHARE CAPITAL AND RESERVES

a) Share capital

The authorised share capital of the Bank comprises 10,000,000,000 (2023: 10,000,000,000) shares of 100 fils each.

2024 2023
KD 000’s KD 000’s

Issued and fully paid in cash:

8,326,442,901 (2023: 7,929,945,620) shares of 100 fils each 832,644 792,995

Annual General Meeting of the shareholders held on 23 March 2024 approved an increase of KD 39,649 thousand (2023: KD 37,762
thousand) in the issued and fully paid share capital of the Bank by issuing 396,497,281 (2023: 377,616,458) bonus shares representing
5% of the share capital. The issued and fully paid-up share capital increased from KD 792,994,562 to KD 832,644,290 and the change in
share capital was recorded in the commercial register on 25 March 2024.

The movement in ordinary shares in issue during the year was as follows:

2024 2023

Number of shares in issue as at 1 January 7,929,945,620 7,552,329,162

Bonus issue 396,497,281 377,616,458

Number of shares in issue as at 31 December 8,326,442,901 7,929,945,620

b) Statutory reserve

The Board of Directors recommended a transfer of KD 19,825 thousand (2023: KD 18,881 thousand) to the statutory reserve. This is
in compliance with the Bank’s Articles of Association and the Companies Law, as amended, which require a minimum of 10% of profit
for the year attributable to the shareholders of the Bank before KFAS, NLST and Zakat to be transferred to a non-distributable statutory
reserve until such time as this reserve exceeds 50% of the Bank’s issued capital. Accordingly, the transfer to statutory reserve, which
is less than 10% of the profit for the year, is that amount required to make the statutory reserve in excess of 50% of the Bank’s issued
capital.

Distribution of this reserve is limited to the amount required to enable payment of a dividend of 5% of share capital in years when
accumulated profits are not sufficient for the payment of a dividend of that amount.

c) Share premium account

The balance in the share premium account is not available for distribution.

NBK Annual Report 2024

19 SHARE CAPITAL AND RESERVES (continued)

d) Treasury shares and Treasury share reserve

The balance in the treasury share reserve account is not available for distribution. Further, an amount equal to the cost of treasury
shares is not available for distribution from general reserve throughout the holding period of these treasury shares.

e) Other reserves

KD 000’s
Foreign Share
currency Cumulative based Actuarial Proposed Total
General Retained translation changes in payment valuation cash other
reserve earnings reserve fair values reserve reserve dividend reserves
Balance as at 1 January 2024 117,058 1,750,695 (351,838) 83,553 14,409 4,514 198,249 1,816,640
Profit for the year - 600,122 - - - - - 600,122
Other comprehensive (loss) income - - (75,580) 9,265 - (1,716) - (68,031)
Total comprehensive income (loss) - 600,122 (75,580) 9,265 - (1,716) - 532,091
Transfer to statutory reserve (Note 19b) - (19,825) - - - - - (19,825)
Final cash dividend paid (2023) - - - - - - (198,249) (198,249)
Interim cash dividend paid - 10 fils per
share (Note 20) - (83,264) - - - - - (83,264)
Proposed final cash dividend - 25 fils
per share (Note 20) - (208,161) - - - - 208,161 -
Proposed bonus shares (Note 20) - (41,633) - - - - - (41,633)
Interest paid on perpetual Tier 1 Capital
Securities - (18,163) - - - - - (18,163)
Profit distribution on Perpetual Tier 1
Sukuk by a subsidiary - (3,652) - - - - - (3,652)
Change in holding in subsidiaries - (75) - - - - - (75)
Realised loss on equity investments at
FVOCI - (162) - 162 - - - -
Other movements - (132) - - - - - (132)
At 31 December 2024 117,058 1,975,750 (427,418) 92,980 14,409 2,798 208,161 1,983,738

169
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

19 SHARE CAPITAL AND RESERVES (continued)

e) Other reserves (continued)

KD 000’s
Foreign Share
currency Cumulative based Actuarial Proposed Total
General Retained translation changes in payment valuation cash other
reserve earnings reserve fair values reserve reserve dividend reserves
Balance as at 1 January 2023 117,058 1,550,747 (336,789) 79,139 14,409 1,014 188,808 1,614,386
Profit for the year - 560,620 - - - - - 560,620
Other comprehensive (loss) income - - (15,049) 4,414 - 3,500 - (7,135)
Total comprehensive income (loss) - 560,620 (15,049) 4,414 - 3,500 - 553,485
Transfer to statutory reserve (Note
19b) - (18,881) - - - - - (18,881)
Final cash dividend paid (2022) - - - - - - (188,808) (188,808)
Interim cash dividend paid - 10 fils per
share (Note 20) - (79,299) - - - - - (79,299)
Proposed final cash dividend - 25 fils
per share (Note 20) - (198,249) - - - - 198,249 -
Proposed bonus shares (Note 20) - (39,649) - - - - - (39,649)
Interest paid on perpetual Tier 1
Capital Securities - (18,224) - - - - - (18,224)
Profit distribution on Perpetual Tier 1
Sukuk by a subsidiary - (3,664) - - - - - (3,664)
Change in holding in subsidiaries - (3,906) - - - - - (3,906)
Other movements - 1,200 - - - - - 1,200
At 31 December 2023 117,058 1,750,695 (351,838) 83,553 14,409 4,514 198,249 1,816,640

The general reserve was created in accordance with Bank’s Articles of Association and is freely distributable, except for the amount
equivalent to the cost of treasury shares.

The foreign currency translation reserve includes the exchange differences on conversion of results and financial position of all group
entities including goodwill, intangible assets and any fair value adjustments to the carrying value of assets and liabilities from their
functional currency to the presentation currency.

Actuarial valuation reserve represents the gain (loss) resulting from increase in the present value of defined benefit plans due to
changes in actuarial assumptions.

NBK Annual Report 2024

20 DIVIDEND

The Board of Directors approved distribution of an interim cash dividend 10 fils per share amounting to KD 83,264 thousand on the
outstanding shares as at 30 June 2024 (30 June 2023: KD 79,299 thousand for 10 fils per share), which was paid during the year.

The Board of Directors recommended distribution of final cash dividend of 25 fils per share (2023: 25 fils per share) and bonus shares
of 5% (2023: 5%) on outstanding shares as at 31 December 2024. The final cash dividend and bonus shares, if approved by the
Shareholders’ Annual General Meeting, shall be payable to the shareholders after obtaining the necessary regulatory approvals.

21 PERPETUAL TIER 1 CAPITAL SECURITIES

The Bank issued the following Perpetual Tier 1 Capital Securities (the “Capital Securities”), through wholly owned special-purpose vehicles:

2024 2023
KD 000’s KD 000’s

USD 700,000 thousand (issued in February 2021 at an interest rate of 3.625% per annum, semi-
annually in arrears, until the first reset date in February 2027, redeemable at the option of the Bank
in August 2026) 211,294 211,294

USD 750,000 thousand (issued in November 2019 at an interest rate of 4.5% per annum, semi-
annually in arrears, until the first reset date in November 2025, redeemable at the option of the
Bank in August 2025) 227,738 227,738

Balance at 31 December
439,032 439,032

The above mentioned Capital securities are subordinated, unsecured and are eligible to be classified under equity in accordance with IAS
32: Financial Instruments – Presentation. Payments of interest in respect of the Capital Securities may be cancelled (in whole or in part)
at the sole discretion of the Bank on a non-cumulative basis. Any such cancellation is not considered an event of default. Payments of
interest are treated as a deduction from equity. The Capital Securities have no maturity date and are callable (in whole but not in part) at
par at the option of the Bank on the first call date and on every interest payment date thereafter, subject to certain conditions.

During 2021, Boubyan Bank K.S.C.P issued “Tier 1 Sukuk”, through a Sharia’s compliant Sukuk arrangement amounting to USD 500,000
thousand, callable in October 2026 and bears an expected profit rate of 3.95% per annum until the first reset date in April 2027, payable
semi-annually in arrears.

Tier 1 Sukuk is a perpetual security with no fixed redemption date and constitutes direct, unsecured, subordinated obligations subject
to the terms and conditions of the Mudaraba Agreement. Tier 1 Sukuk is eligible to be classified under equity in accordance with IAS 32 :
Financial Instruments – Presentation. The Parent Bank did not subscribe to the Tier 1 Sukuk issue and the total amount is included in non-
controlling interest in the consolidated statement of financial position.

171
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

22 SHARE BASED PAYMENT

The Bank operates a cash-settled share-based compensation plan and granted options to its senior executives. These options vest if
the employees remain in service for a period of three years and will be settled by cash payment determined based on the market value
of the Bank’s equity shares on vesting date.

The fair value of options granted during the year as determined using the Black-Scholes valuation model was KD 0.830 (2023: KD 0.837)
as at the end of the year. The significant inputs into the model were a share price of KD 0.896 (2023: KD 0.894) at the measurement
date, a standard deviation of expected share price returns of 18.93% (2023: 26.06%), option life disclosed above and annual risk free
interest rate of 4.00% (2023: 4.25%). The volatility measured at the standard deviation of expected share price returns is based on
statistical analysis of daily share prices over the last three years.

The following table shows the movement in number of share options during the year:

2024 2023
No. of share No. of share
options options

Outstanding at 1 January 8,202,862 7,575,281

Granted during the year 3,704,972 2,875,178

Exercised during the year (2,617,837) (1,974,760)

Lapsed during the year (402,110) (272,837)

Outstanding at 31 December 8,887,887 8,202,862

The expense accrued on account of share-based compensation plans for the year amounts to KD 2,524 thousand (2023: KD 1,759
thousand) and is included under staff expenses.

23 FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer
price quotations. For all other financial instruments the Group determines fair values using valuation techniques.

The Group measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the
measurements:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e.
derived from prices). This category includes instruments valued using quoted prices for identical or similar instruments in market that
are considered less than active or other valuation techniques in which all significant inputs are observable from market data. Debt
securities under this category mainly include sovereign debt instruments in the Middle East & North Africa (MENA) region.

NBK Annual Report 2024

23 FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

Level 3: valuation techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable
market data.

Valuation techniques include discounted cash flow models, comparison with similar instruments for which market observable prices
exist, recent transaction information and net asset values. Assumptions and inputs used in valuation techniques include risk-free
and benchmark interest rates, credit spreads and other premium used in estimating discount rates, bond and equity prices, foreign
currency exchange rates and expected price volatilities and correlations. The objective of valuation techniques is to arrive at a fair value
measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction
between market participants at the measurement date.

The Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. During the year
ended 31 December 2024, there were no transfers between level 1, level 2 and level 3.

The following table provides the fair value measurement hierarchy of the Group’s financial instruments recorded at fair value:

Level 1 Level 2 Level 3 Total

2024
KD 000’s KD 000’s KD 000’s KD 000’s

Debt securities 5,813,600 338,109 - 6,151,709

Equities and other investments 60,614 272,576 42,461 375,651

5,874,214 610,685 42,461 6,527,360

Derivative financial instruments (Note 26) - 280,079 - 280,079

Level 1 Level 2 Level 3 Total

2023
KD 000’s KD 000’s KD 000’s KD 000’s

Debt securities 5,192,114 345,509 - 5,537,623

Equities and other investments 61,356 188,570 43,012 292,938

5,253,470 534,079 43,012 5,830,561

Derivative financial instruments (Note 26) - 247,694 - 247,694

173
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

23 FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

The table below analyses the movement in level 3 and the income (dividend and realised gain) generated during the year.

Net gains
in the
At 31 consolidated
At 1 January Change in fair Sale/ Exchange rate December statement of
2024 value Additions redemption movements 2024 income

KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Equities and
other investments 43,012 (1,223) 1,235 (597) 34 42,461 1,389

Net gains
in the
At 31 consolidated
At 1 January Change in fair Sale/ Exchange rate December statement of
2023 value Additions redemption movements 2023 income

KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Equities and
other investments 48,046 (266) 849 (5,705) 88 43,012 2,244

Equities and other securities included in this category mainly include strategic equity investments and private equity funds which are
not traded in an active market. The fair values of these investments are estimated by using valuation techniques that are appropriate
in the circumstances. Valuation techniques include discounted cash flow models, observable market information of comparable
companies, recent transaction information and net asset values. Significant unobservable inputs used in valuation techniques mainly
include discount rate, terminal growth rate, revenue, profit estimates and market multiples such as price to book and price to earnings.
Given the diverse nature of these investments, it is not practical to disclose a range of significant unobservable inputs.

Other financial assets and liabilities are carried at amortised cost and the carrying values are not materially different from their fair
values as most of these assets and liabilities are of short term maturities or are repriced immediately based on market movement in
interest rates. Fair values of remaining financial assets and liabilities carried at amortised cost are estimated mainly using discounted
cash flow models incorporating certain assumptions such as credit spreads that are appropriate in the circumstances.

Sensitivity analysis on fair value estimations, by varying input assumptions by a reasonable margin, did not indicate any material
impacts on consolidated statement of financial position or consolidated statement of income.

NBK Annual Report 2024

24 SUBSIDIARIES

Principal operating subsidiaries:

Country of Principal
Name of entities incorporation business Percentage ownership

2024 2023

Boubyan Bank K.S.C.P. Kuwait Islamic Banking 60.4 60.4

National Bank of Kuwait - Egypt S.A.E. Egypt Banking 99.1 99.1

Investment
Watani Investment Company K.S.C.(Closed) Kuwait Company 100.0 100.0

National Bank of Kuwait (International) PLC United Kingdom Banking 100.0 100.0

National Bank of Kuwait France SA France Banking 100.0 100.0

Investment
NBK Banque Privée (Suisse) S.A. Switzerland Management 100.0 100.0

National Bank of Kuwait (Lebanon) S.A.L. Lebanon Banking 85.5 85.5

Credit Bank of Iraq S.A. Iraq Banking 92.5 91.0

Investment
National Investors Group Holdings Limited Cayman Islands Company 100.0 100.0

Investment
Watani Wealth Management Company Saudi Arabia Management 100.0 100.0

Watani Financial Brokerage Company

K.S.C. (Closed) Kuwait Brokerage 100.0 100.0

Treasury
NBK GDM (Caymans) Limited Cayman Islands activities 100.0 100.0

BLME Holdings Plc, (“BLME”)

(held through Boubyan Bank K.S.C.P.) United Kingdom Islamic Banking 72.4 72.1

Upayments Company for Electronic Payments and Financial

Settlement K.S.C. (Closed) Kuwait Technology 51.0 -

At 31 December 2024, 38.1% (2023: 38.1%) of the Group’s interest in National Bank of Kuwait (Lebanon) S.A.L. was held by an
intermediate holding company, NBK Holding (Liban) S.A.L.

On 1 December 2024, the Bank acquired 51% of the issued share capital in Upayments Company for Electronic Payments and
Settlement K.S.C. (Closed), for a total consideration of KD 4,079 thousand resulting in a provisional goodwill of KD 3,953 thousand
(Refer note 15). The provisional values assigned to the identifiable assets and liabilities acquired as at the date of acquisition will be
reviewed within one year of acquisition.

The Bank also holds voting capital in certain special-purpose entities which have been established to manage funds and fiduciary
assets on behalf of the Bank’s customers. The Bank does not have a beneficial interest in the underlying assets of these companies.
Information about the Group’s fund management activities is set out in Note 30.

175
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

24 SUBSIDIARIES (continued)

Significant non-controlling interest exists in Boubyan Bank K.S.C.P. as follows:

2024 2023
KD 000’s KD 000’s

Accumulated balances of non-controlling interest 596,997 575,626

Profit attributable to non-controlling interest 37,665 27,179

Summarized financial information of Boubyan Bank K.S.C.P. is as follows:

2024 2023
KD 000’s KD 000’s

Summarized financial information

Assets 9,376,568 8,404,989

Liabilities 8,290,508 7,376,154

Net operating income 246,183 218,030

Results for the year 96,784 78,221

Other comprehensive income (loss) for the year (1,097) 4,819

2024 2023
KD 000’s KD 000’s

Summarized cash flow information

Operating cash flow 498,051 273,595

Investing cash flow (236,578) (336,084)

Financing cash flow (140,357) (104,200)

NBK Annual Report 2024

25 COMMITMENTS AND CONTINGENT LIABILITIES

2024 2023
KD 000’s KD 000’s

Commitments on behalf of customers for which there are corresponding

liabilities by the customers concerned:

Acceptances 180,765 189,080

Letters of credit 545,793 391,486

Guarantees 4,670,825 4,035,345

5,397,383 4,615,911

Irrevocable commitments to extend credit amount to KD 1,410,803 thousand (2023: KD 1,327,508 thousand). This includes commitments
to extend credit which are irrevocable over the life of the facility or are revocable only in response to a material adverse change.

In the normal course of business, the Group has exposure to various indirect credit commitments which, though not reflected in the
consolidated statement of financial position, are subject to normal credit standards, financial controls and monitoring procedures.

These credit commitments do not necessarily represent future cash requirements, since many of these commitments will expire or
terminate without being funded. Credit losses, if any, which may result from exposure to such commitments are not expected to be
significant.

The Group has commitments in respect of capital expenditure amounting to KD 75,598 thousand (2023: KD 85,980 thousand).

26 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING

Derivative financial instruments are financial instruments that derive their value by referring to interest rates, foreign exchange rates, index
of prices or rates and credit rating or credit index. Notional principal amounts merely represent amounts to which a rate or price is applied
to determine the amounts of cash flows to be exchanged and do not represent the potential gain or loss associated with the market or
credit risk of such instruments.

Derivative financial instruments are carried at fair value in the consolidated statement of financial position. Positive fair value represents
the cost of replacing all transactions with a fair value in the Group’s favour had the rights and obligations arising from that instrument
been closed in an orderly market transaction at the reporting date. Credit risk in respect of derivative financial instruments is limited
to the positive fair value of the instruments. Negative fair value represents the cost to the Group’s counter-parties of replacing all their
transactions with the Group.

The Group deals in interest rate swaps to manage its interest rate risk on interest-bearing assets and liabilities and to provide interest rate
risk management solutions to customers. Similarly the Group deals in forward foreign exchange contracts for customers and to manage its
foreign currency positions and cash flows.

Interest rate swaps used to hedge the change in fair value of the Group’s financial assets and liabilities and which qualifies as effective
hedging instruments are disclosed as ‘held as fair value hedges’. Other interest rate swaps and forward foreign exchange contracts are
carried out for customers or used for hedging purpose but do not meet the qualifying criteria for hedge accounting. The risk exposures
on account of derivative financial instruments for customers are covered by entering into opposite transactions (back to back) with
counterparties or by other risk mitigating transactions.

177
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

26 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING (continued)

Interest rate swaps

Interest rate swaps are contractual agreements between two counter-parties to exchange interest payments on a defined principal
amount for a fixed period of time. In cross currency interest rate swaps, the Group exchanges interest payment in two different
currencies on a defined principal amount for a fixed period of time and also exchanges defined principal amounts in two different
currencies at inception of the contract and re-exchanges principal amounts on maturity. Profit rate swaps are also included in this
category.

Forward foreign exchange

Forward foreign exchange contracts are agreements to buy or sell currencies at a specified rate and at a future date.

The fair value of derivative financial instruments included in the financial records, together with their notional amounts is summarised as
follows:

2024 2023

Positive fair Negative fair Positive fair Negative fair

value value Notional value value Notional
KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Interest rate swaps (held

as fair value hedges) 313,330 23,226 6,491,388 281,222 43,973 5,517,257

Interest rate swaps

(others) 2,605 657 97,283 891 1,753 86,318

Forward foreign
exchange contracts 20,129 32,102 3,960,357 28,333 17,026 4,421,462

336,064 55,985 10,549,028 310,446 62,752 10,025,037

Positive fair value is included in other assets (Note 16) and negative fair value is included in other liabilities (Note 18).

The Group’s strategy is not to carry interest rate risk for long duration assets. The Group uses interest rate swaps to hedge its exposure
to changes in the fair values due to interest rate risk on certain investments in fixed rate debt securities, fixed-rate corporate loans and
fixed-rate liabilities issued. Hedge accounting is applied where economic hedge relationships meet the hedge accounting criteria. In fair
value hedge relationships, the Group assesses whether the interest rate swaps designated in each hedging relationship is expected to
be highly effective in offsetting changes in fair value of the hedged item attributable to interest rate risk using appropriate qualitative
and quantitative methods. The Group generally seeks to fully match the critical terms (tenor, notionals, interest rate exposure, currency,
interest payments frequency and payment periods) of the hedged item and hedging instrument.

The Group minimises counterparty credit risk in derivative instruments by entering into transactions with high-quality counterparties.

NBK Annual Report 2024

27 RELATED PARTY TRANSACTIONS

Related parties comprise board members and executive officers of the Bank, their close family members, companies controlled by
them or close family members and associates of the Group. Certain related parties were customers of the Group in the ordinary course
of business. Transactions with related parties were made on substantially the same terms, including interest rates and collateral, as
those prevailing at the same time for comparable transactions with unrelated parties and did not involve more than a normal amount
of risk. Lending to Board Members and their related parties is secured by tangible collateral in accordance with regulations of Central
Bank of Kuwait.

Details of the interests of related parties are as follows:

Number of Board Members Number of

and Executive Officers related parties

2024 2023 2024 2023 2024 2023

KD 000’s KD 000’s

Board Members and Executive Officers

Loans 8 6 19 22 47,093 49,652

Contingent liabilities 1 1 8 7 21,164 22,719

Credit cards 17 19 33 28 229 187

Deposits 25 24 84 88 39,423 36,927

Collateral against credit facilities 2 3 15 14 151,457 153,137

Interest and fee income 2,810 3,005

Interest expense 1,137 1,205

Purchase of equipment and other expenses 365 330

Details of compensation to key management personnel are as follows:

2024 2023
KD 000’s KD 000’s

Salaries and other short term benefits 15,503 14,095

Post-employment benefits 230 341

Share based compensation 965 656

16,698 15,092

Remuneration to directors of the Bank amounting to KD 770 thousand for the year ended 31 December 2024 (31 December 2023:
KD 770 thousand, approved in AGM held on 23 March 2024) is in accordance with local regulations and is subject to approval of
shareholders at the Annual General Meeting.

179
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

28 RISK MANAGEMENT

Risk is inherent in the Group’s activities but is managed in a structured, systematic manner through a global risk policy which
embeds comprehensive risk management into organisational structure, risk measurement and monitoring processes. The overall
risk management direction and oversight are provided by the Board of Directors with the support of the Board Risk and Compliance
Committee and the Board Audit Committee. The Group’s Risk Management and Internal Audit functions assist Executive Management
in controlling and actively managing the Group’s overall risk profile.

The Group is exposed to credit risk, liquidity risk, market risk and operational risk.

In accordance with the Central Bank of Kuwait’s directives, the Group has implemented a comprehensive system for the measurement
and management of risk. This methodology helps in reflecting both the expected loss likely to arise in normal circumstances and
unexpected losses, which are an estimate of the ultimate actual loss based on statistical models. Information compiled from all internal
business groups are closely examined and analysed to identify and control risks.

Transactions and outstanding risk exposures are quantified and compared against authorised limits, whereas non- quantifiable risks
are monitored against policy guidelines and key risk and control indicators. Any discrepancies, excesses or deviation are escalated to
management for appropriate action.

As part of its overall risk management, the Group uses interest rate swaps, forward foreign exchange contracts and other instruments
to manage exposures resulting from changes in interest rates, foreign exchange, equity risks, credit risks and exposures arising from
forecast transactions. Collaterals are used to reduce the Group’s credit risks.

The Group’s comprehensive risk management framework has specific guidelines that focus on maintaining a diversified portfolio to
avoid excessive concentration of risk.

28.1 CREDIT RISK

Credit risk is the risk that counterparty will cause a financial loss to the Group by failing to discharge an obligation. Credit risk arises in
the Group’s normal course of business.

All significant policies relating to credit risks are reviewed and approved by the Board of Directors.

Credit limits are established for all customers after a careful assessment of their creditworthiness. Standing procedures, outlined in the
Group’s Credit Policy Manual, require that all credit proposals be subjected to detailed screening by the domestic or international credit
control divisions pending submission to the appropriate credit committee. Whenever necessary, all loans are secured by acceptable
forms of collateral to mitigate the related credit risks.

In accordance with the instructions of the Central Bank of Kuwait dated 18 December 1996, setting out the rules and regulations
regarding the classification of credit facilities, the Group has formed an internal committee comprising competent professional staff
and having as its purpose the study and evaluation of the existing credit facilities of each customer of the Group. This committee is
required to identify any abnormal situations and difficulties associated with a customer’s position which might cause the debt to be
classified as irregular, and to determine an appropriate provisioning level. The committee, which meets regularly throughout the year,
also studies the positions of those customers whose irregular balances exceed 25% of their total debt, in order to determine whether
further provisions are required.

The Group further limits risk through diversification of its assets by geography and industry sector. In addition, all credit facilities are
continually monitored based on a periodical review of the credit performance and account rating.

NBK Annual Report 2024

28 RISK MANAGEMENT (continued)
28.1 CREDIT RISK (continued)

28.1. 1 ASSESSMENT OF EXPECTED CREDIT LOSSES

Definition of default
The Group considers a financial asset to be in default and therefore Stage 3 (credit impaired) for ECL calculations when:

• the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising
security (if any is held);
• the borrower is past due more than 90 days on any material credit obligation to the Group; or
• borrower is considered as credit-impaired based on qualitative assessment for internal credit risk Management purposes
• retail facilities from commencement of legal recourse

The Group considers investments and interbank balances as in default when the coupon or principal payment is past due for 1 day. The
Group considers externally-rated portfolio with ratings ‘D’ from S&P and Fitch, and ‘C’ from Moody’s as defaulted.

The Group considers a variety of indicators that may indicate unlikeliness to pay as part of a qualitative assessment of whether a
customer is in default. Such indicators include:

• breaches of covenants
• borrower having past due liabilities to public creditors or employees
• borrower is deceased

The Group considers a financial asset to be no longer in default and therefore reclassified out of stage 3, when it no longer meets
any of the default criteria. Transfer from Stage 3 to Stage 2/Stage 1 requires a notification to be sent to the Regulator with the proper
justification.

Significant increase in credit risk

The Group continuously monitors all assets subject to ECLs. In order to determine whether an instrument or a portfolio of instruments
is subject to 12 months ECL or life time ECL, the Group assess as whether there has been a significant increase in credit risk since
initial recognition. The quantitative criteria used to determine a significant increase in credit risk is a series of relative and absolute
thresholds. Financial assets that are 30 days past due are generally deemed to have significant increase in credit risk since initial
recognition and migrated to stage 2 even if other criteria do not indicate a significant increase in credit risk unless this is rebutted.

Any stressed credit facility that has been restructured would also be classified in stage 2 unless it qualifies for stage 3 classification.
The Group considers a financial asset as ‘cured’ (i.e., in a lowered distressed state) and therefore reclassified out of stage 2 when it
no longer meets the criteria for inclusion in Stage 2. According to the regulatory requirements, for facilities (except for retail facilities)
classified under Stage 2, these would require completing a minimum of 1 year, post recovery, of meeting the scheduled payments, to be
classified in Stage 1. Transfer from Stage 2 to Stage 1 requires a notification to be sent to the Regulator with the proper justification.

The Group considers a financial instrument with an external rating of “investment grade” as at the reporting date to have low credit risk.
In addition to the above quantitative criteria, the Group applies qualitative criteria for the assessment of significant increase in credit
risk based on monitoring of certain early warning signals.

Measurement of ECLs
ECLs are probability-weighted estimates of credit losses and are measured as the present value of all cash shortfalls discounted at
the effective interest rate of the financial instrument. Cash shortfall represents the difference between cash flows due to the Group
in accordance with the contract and the cash flows that the Group expects to receive. The key elements in the measurement of ECL
include probability of default (PD), loss given default (LGD) and exposure at default (EAD). The Group estimates these elements using
appropriate credit risk models taking into consideration the internal and external credit ratings of the assets, nature and value of
collaterals, forward-looking macro-economic scenarios, etc.

181
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

28 RISK MANAGEMENT (continued)

28.1 CREDIT RISK (continued)
28.1. 1 ASSESSMENT OF EXPECTED CREDIT LOSSES (continued)

The Group calculates ECL on credit facilities classified in stage 3 at 100% of the defaulted exposure net of the value of eligible
collaterals after applying applicable haircuts.

The Group in estimating ECL for credit facilities has taken into consideration the following key parameters based on inputs from CBK:

• Floor for estimating PDs for specific portfolios

• Eligible collateral with haircuts for determining LGD and floor for LGD for unsecured facilities.
• Deemed maturity for exposures in Stage 2
• Credit Conversion Factor on utilized and un-utilized portions for cash and non-cash facilities

Internal rating and PD estimation process

In managing its portfolio, the Group utilises ratings and other measures and techniques which seek to take account of all aspects of
perceived risk. The Group uses industry-standard rating tools for assessing ratings/scores that are then leveraged for PD estimation
process. The tool provides the ability to analyse a business and produces risk ratings at both the obligor and facility levels. The analysis
supports the usage of financial factors as well as non-financial subjective factors. The Group also uses external ratings by recognised
rating agencies for externally-rated portfolios.

The Probability of Default (PD) is the likelihood that an obligor will default on its obligations in the future. IFRS 9 requires the use of
separate PD for a 12-month duration and lifetime duration depending on the stage allocation of the obligor. A PD used for IFRS 9 should
reflect the Group’s estimate of the future asset quality. The through-the-cycle (TTC) PDs are generated from the rating tool based on the
internal/external credit ratings. The Group converts the TTC PDs to point-in-time (PIT) PD term structures using appropriate models and
techniques.

The Group assesses the PD for its retail portfolio through behavioural scorecards. The Consumer portfolio is further segmented
statistically and risk pools with shared risk characteristics are addressed with different scorecards relevant for each of the risk pool.
The segmentation is based on demographic, behavioural and financial variables which distinctly rank order risk. The scorecards were
developed using statistical techniques. Executing the scorecard will return an associated PD value for each of the facility. The term
structure PDs are then derived using a base PD.

Exposure at default
Exposure at default (EAD) represents the amount which the obligor will owe to the Group at the time of default. The Group considers
variable exposures that may increase the EAD in addition to the drawn credit line. These exposures arise from undrawn limits
and contingent liabilities. Therefore, the exposure will contain both on and off balance sheet values. EAD is estimated taking into
consideration the contractual terms such as coupon rates, frequency, reference curves, maturity, pre-payment options, amortization
schedule, credit conversion factors, etc. EAD for retail loans incorporate prepayment assumptions whereas, for credit cards portfolio,
credit conversion factors are applied to estimate the future drawdowns.

NBK Annual Report 2024

28 RISK MANAGEMENT (continued)
28.1 CREDIT RISK (continued)
28.1. 1 ASSESSMENT OF EXPECTED CREDIT LOSSES (continued)

Loss-given-default
Loss-given-default (LGD) is the magnitude of the likely loss if there is a default. The Group estimates LGD parameters based on the
history of recovery rates of claims against defaulted counterparties. The LGD models consider the structure, collateral, seniority of the
claim, counterparty industry and recovery costs of any collateral that is integral to the financial asset.

Incorporation of forward-looking information

The Group considers various key economic variables which reflect the continuing uncertainties and effect stemming from Covid-19
and other emerging risks, which may be expected to have an impact on credit risk and the ECL, when incorporating forward-looking
information into the ECL models. Key economic variables include, but are not limited to, Gross Domestic Product, Equity price index, Oil
prices, and Government expenditure. Together, they provide reasonable indications and forecasts of future macro-economic conditions.
The consideration of such factors increases the degree of judgment in determination of ECL. The Group employs statistical models
which incorporate the effect of macro-economic factors to adjust the historical TTC PDs to arrive at the PiT PDs. The Group considers
three scenarios (baseline, upside and downside) of forecasts of macro-economic data separately for designated geographies and
segments, and appropriate probability weights are applied to these scenarios to derive a probability-weighted outcome of expected
credit loss. Management reviews the methodologies and assumptions including any forecasts of future economic conditions, on a
regular basis.

The weighting of the multiple scenarios increased the Group’s reported allowance for expected credit losses on financial assets, other
than credit facilities, in Stage 1 and Stage 2, relative to the base case scenario, by KD 4,601 thousand (2023: increased by KD 3,503
thousand). If the Group were to use only downside case scenario, allowance for expected credit losses on financial assets other than
credit facilities would be KD 14,410 thousand (2023: KD 13,176 thousand) higher than the reported allowance for expected credit
losses on financial assets, other than credit facilities, as at 31 December 2024.

The weighting of the multiple scenarios increased the Group’s reported allowance for expected credit losses on credit facilities, in Stage
1 and Stage 2, relative to the base case scenario, by KD 3,404 thousand (2023: increased by KD 11,927 thousand). If the Group were
to use only downside case scenario, allowance for expected credit losses on credit facilities would be KD 25,739 thousand (2023: KD
54,644 thousand) higher than the reported allowance for expected credit losses on credit facilities as at 31 December 2024.

Actual outcomes may differ as this neither considers the migration of exposures nor incorporates changes which would occur in the
portfolio due to risk mitigation actions and other factors.

183
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

28 RISK MANAGEMENT (continued)

28.1 CREDIT RISK (continued)

28.1. 2 MAXIMUM EXPOSURE TO CREDIT RISK

An analysis of loans, advances and Islamic facilities to customers and contingent liabilities before and after taking account of eligible
collateral held or other credit enhancements, is as follows:

2024 2023

Gross Net Gross Net

exposure exposure exposure exposure
KD 000’s   KD 000’s   KD 000’s   KD 000’s  

Loans, advances and Islamic financing to customers 23,707,609 16,300,409 22,281,004 15,841,839

Contingent liabilities 5,397,383 5,198,303 4,615,911 4,430,493

For other financials assets, the gross exposure amounts are equal to net exposure amounts.

Collateral and other credit enhancements

The amount, type and valuation of collateral are based on guidelines specified in the risk management framework. The main types of
collateral accepted includes real estate, quoted shares, cash collateral and bank guarantees. The revaluation and custody of collaterals
are performed independent of the business units.

28.1. 3 RISK CONCENTRATION OF THE MAXIMUM EXPOSURE TO CREDIT RISK

Concentrations of credit risk arise from exposure to customers having similar characteristics in terms of the geographic location in
which they operate or the industry sector in which they are engaged, such that their ability to discharge contractual obligations may be
similarly affected by changes in political, economic or other conditions.

Credit risk can also arise due to a significant concentration of Group’s assets to any single counterparty. This risk is managed by
diversification of the portfolio. The 20 largest loans, advances and Islamic financing to customers outstanding as a percentage of gross
loans, advances and Islamic financing to customers as at 31 December 2024 is 14% (2023: 14%).

NBK Annual Report 2024

28 RISK MANAGEMENT (continued)
28.1 CREDIT RISK (continued)
28.1. 3 RISK CONCENTRATION OF THE MAXIMUM EXPOSURE TO CREDIT RISK (continued)

The Group’s financial assets and off-balance sheet items, before taking into account any collateral held or credit enhancements can be
analysed by the following geographic regions:

2024 Middle
East and North Europe
North Africa America & UK Asia Others Total
Geographic region KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Balances and deposits with banks 3,566,306 1,977,667 822,416 163,868 183 6,530,440

Central Bank of Kuwait bonds 343,652 - - - - 343,652

Kuwait Government treasury Bonds 148,555 - - - - 148,555

Loans, advances and Islamic

financing to customers 19,412,335 677,969 2,434,663 698,483 484,159 23,707,609

Investment securities 5,251,438 60,936 523,169 1,384,725 30,559 7,250,827

Other assets 256,187 39,432 399,170 9,375 2,904 707,068

28,978,473 2,756,004 4,179,418 2,256,451 517,805 38,688,151

Commitments and contingent

liabilities (Note 25) 3,995,118 385,974 1,160,180 1,240,604 26,310 6,808,186

32,973,591 3,141,978 5,339,598 3,497,055 544,115 45,496,337

2023 Middle
East and North Europe
North Africa America & UK Asia Others Total
Geographic region KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s KD 000’s

Balances and deposits with banks 3,300,992 1,255,953 700,504 279,435 - 5,536,884

Central Bank of Kuwait bonds 856,815 - - - - 856,815

Kuwait Government treasury Bonds 194,111 - - - - 194,111

Loans, advances and Islamic

financing to customers 18,706,076 579,586 1,911,118 652,231 431,993 22,281,004

Investment securities 4,783,897 51,918 420,703 1,304,861 30,504 6,591,883

Other assets 305,897 35,361 294,212 8,678 2,134 646,282

28,147,788 1,922,818 3,326,537 2,245,205 464,631 36,106,979

Commitments and contingent

liabilities (Note 25) 3,391,864 320,596 1,181,022 1,008,663 41,274 5,943,419

31,539,652 2,243,414 4,507,559 3,253,868 505,905 42,050,398

185
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

28 RISK MANAGEMENT (continued)

28.1 CREDIT RISK (continued)
28.1. 3 RISK CONCENTRATION OF THE MAXIMUM EXPOSURE TO CREDIT RISK (continued)

The Group’s financial assets and off-balance sheet items, before taking into account any collateral held or credit enhancements, can be
analysed by the following industry sectors:

2024 2023
KD 000’s KD 000’s

Industry sector

Trading 2,368,557 2,206,795

Manufacturing 3,658,643 3,369,644

Banks and other financial institutions 14,128,204 12,929,028

Construction 2,038,145 1,658,949

Real Estate 5,308,650 4,596,994

Retail 7,650,702 7,435,574

Government 3,788,180 3,658,123

Others 6,555,256 6,195,291

45,496,337 42,050,398

28.1. 4 CREDIT QUALITY PER CLASS OF FINANCIAL ASSETS

In managing its portfolio, the Group utilises ratings and other measures and techniques which seek to take account of all aspects of
perceived risk. Credit exposures classified as ‘High’ quality are those where the default risk from the obligor’s failure to discharge its
obligation is assessed to be low. These include facilities to corporate entities with financial condition, risk indicators and capacity to
repay which are considered to be good to excellent. Credit exposures classified as ‘Standard’ quality comprise all other facilities whose
payment performance is fully compliant with contractual conditions and which are not ‘impaired’. The default risk on ‘Standard’ quality
is assessed to be higher than that for the exposures classified within the ‘High’ quality range.

NBK Annual Report 2024

28 RISK MANAGEMENT (continued)
28.1 CREDIT RISK (continued)
28.1. 4 CREDIT QUALITY PER CLASS OF FINANCIAL ASSETS (continued)

The table below shows the credit quality by class of financial assets for consolidated statement of financial position lines, based on the
Group’s credit rating system.

High Standard Impaired Total

2024
KD 000’s KD 000’s KD 000’s KD 000’s

Balances and short term deposits with banks 5,148,405 - 26,030 5,174,435

Central Bank of Kuwait bonds 343,652 - - 343,652

Kuwait Government treasury bonds 148,555 - - 148,555

Deposits with banks 1,244,396 139,472 - 1,383,868

Loans, advances and Islamic financing to customers 20,735,720 3,507,105 329,120 24,571,945

Investments in debt securities – Amortized cost 327,861 788,101 - 1,115,962

Investments in debt securities – FVOCI 5,676,911 454,381 770 6,132,062

Investments in debt securities – FVTPL 19,647 - - 19,647

33,645,147 4,889,059 355,920 38,890,126

High Standard Impaired Total

2023
KD 000’s KD 000’s KD 000’s KD 000’s

Balances and short term deposits with banks 4,220,354 - 26,788 4,247,142

Central Bank of Kuwait bonds 856,815 - - 856,815

Kuwait Government treasury bonds 194,111 - - 194,111

Deposits with banks 1,028,972 289,946 307 1,319,225

Loans, advances and Islamic financing to customers 20,020,437 2,805,031 318,386 23,143,854

Investments in debt securities – Amortized cost 254,858 818,328 - 1,073,186

Investments in debt securities – FVOCI 4,996,478 522,695 471 5,519,644

Investments in debt securities – FVTPL 17,979 - - 17,979

31,590,004 4,436,000 345,952 36,371,956

187
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

28 RISK MANAGEMENT (continued)

28.2 LIQUIDITY RISK

Liquidity risk is the risk that the Group will be unable to meet its financial liabilities when they fall due. To limit this risk, management
has arranged diversified funding sources, manages assets with liquidity in mind and monitors liquidity on a daily basis.

The table below summarises the maturity profile of Group’s assets, liabilities and equity based on contractual cash flows and maturity
dates. This does not necessarily take account of the effective maturities.

Up to 3 3 to 12 Over 1
2024 months months year Total
KD 000’s KD 000’s KD 000’s KD 000’s

Assets

Cash and deposits with banks 6,640,925 65,678 - 6,706,603

Central Bank of Kuwait bonds 319,009 24,643 - 343,652

Kuwait Government treasury bonds - - 148,555 148,555

Loans, advances and Islamic financing to customers 6,925,537 2,840,902 13,941,170 23,707,609

Investment securities 886,512 575,599 6,164,367 7,626,478

Land, premises and equipment - - 517,392 517,392

Goodwill and other intangible assets - - 510,733 510,733

Other assets 337,428 42,806 396,900 777,134

15,109,411 3,549,628 21,679,117 40,338,156

Liabilities and equity

Due to banks 4,383,457 1,002,590 17,755 5,403,802

Deposits from other financial institutions 1,969,051 976,893 3,812 2,949,756

Customer deposits 17,049,292 5,165,456 651,457 22,866,205

Certificates of deposit issued 1,035,601 465,856 - 1,501,457

Other borrowed funds 231,075 - 1,289,347 1,520,422

Other liabilities 750,290 7,942 181,550 939,782

Share capital and reserves - - 3,904,167 3,904,167

Proposed cash dividend - 208,161 - 208,161

Perpetual Tier 1 Capital Securities - - 439,032 439,032

Non-controlling interests - - 605,372 605,372

25,418,766 7,826,898 7,092,492 40,338,156

NBK Annual Report 2024

28 RISK MANAGEMENT (continued)
28.2 LIQUIDITY RISK (continued)

Up to 3 3 to 12 Over 1
2023 months months year Total
KD 000’s KD 000’s KD 000’s KD 000’s

Assets

Cash and deposits with banks 5,520,612 182,209 - 5,702,821

Central Bank of Kuwait bonds 472,911 383,904 - 856,815

Kuwait Government treasury bonds - 47,000 147,111 194,111

Loans, advances and Islamic financing to Customers 6,271,945 2,794,350 13,214,709 22,281,004

Investment securities 779,059 539,776 5,565,986 6,884,821

Land, premises and equipment - - 506,812 506,812

Goodwill and other intangible assets - - 508,416 508,416

Other assets 313,603 53,340 363,248 730,191

13,358,130 4,000,579 20,306,282 37,664,991

Liabilities and equity

Due to banks 3,223,281 728,464 12,057 3,963,802

Deposits from other financial institutions 2,543,653 1,167,902 14,074 3,725,629

Customer deposits 15,776,574 5,493,783 678,600 21,948,957

Certificates of deposit issued 637,710 185,189 - 822,899

Other borrowed funds - 153,690 1,177,316 1,331,006

Other liabilities 783,894 18,927 163,302 966,123

Share capital and reserves - - 3,685,523 3,685,523

Proposed cash dividend - 198,249 - 198,249

Perpetual Tier 1 Capital Securities - - 439,032 439,032

Non-controlling interests - - 583,771 583,771

22,965,112 7,946,204 6,753,675 37,664,991

189
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

28 RISK MANAGEMENT (continued)

28.2 LIQUIDITY RISK (continued)

The liquidity profile of financial liabilities of the Group summarised below reflects the cash flows including future interest payments
over the life of these financial liabilities based on contractual repayment arrangements.

Up to 3 3 to 12 Over 1
2024 months months year Total
KD 000’s KD 000’s KD 000’s KD 000’s
Financial Liabilities
Due to banks 4,396,381 1,024,925 19,670 5,440,976
Deposits from other financial institutions 1,976,437 1,005,787 4,080 2,986,304
Customer deposits 17,112,146 5,306,011 735,053 23,153,210
Certificates of deposit issued 1,039,576 478,818 - 1,518,394
Other borrowed funds 239,974 39,721 1,413,305 1,693,000
24,764,514 7,855,262 2,172,108 34,791,884
Contingent liabilities and commitments
Contingent liabilities 1,408,862 2,235,696 1,752,825 5,397,383
Irrevocable commitments 249,020 352,799 808,984 1,410,803
1,657,882 2,588,495 2,561,809 6,808,186
Derivative financial instruments settled on a gross basis
Contractual amounts payable 3,324,330 671,705 271,348 4,267,383
Contractual amounts receivable 3,329,508 675,587 273,425 4,278,520

Up to 3 3 to 12 Over 1
2023 months months year Total
KD 000’s KD 000’s KD 000’s KD 000’s
Financial Liabilities
Due to banks 3,230,779 752,183 13,212 3,996,174
Deposits from other financial institutions 2,554,144 1,198,201 15,658 3,768,003
Customer deposits 15,831,255 5,658,392 763,543 22,253,190
Certificates of deposit issued 642,697 190,310 - 833,007
Other borrowed funds 8,540 195,681 1,291,674 1,495,895
22,267,415 7,994,767 2,084,087 32,346,269
Contingent liabilities and commitments
Contingent liabilities 1,364,374 1,885,643 1,365,894 4,615,911
Irrevocable commitments 274,707 313,361 739,440 1,327,508
1,639,081 2,199,004 2,105,334 5,943,419
Derivative financial instruments settled on a gross basis
Contractual amounts payable 3,360,572 1,056,390 309,391 4,726,353
Contractual amounts receivable 3,355,216 1,053,861 299,513 4,708,590

NBK Annual Report 2024

28 RISK MANAGEMENT (continued)

28.3 MARKET RISK

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market prices.
Market risks arise from open positions in interest rate, currency and equity products, all of which are exposed to general and specific
market movements and changes in the level of volatility of market rates or prices such as interest rates, foreign exchange rates and
equity prices.

28.3.1 INTEREST RATE RISK

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates.

The Group is not excessively exposed to interest rate risk as its assets and liabilities are repriced regularly and most exposures arising
on medium-term fixed-rate lending or fixed-rate borrowing are covered by interest rate swaps. Furthermore, the re-pricing gaps of its
assets and liabilities are carefully monitored and controlled through limits pre-established by the Board of Directors and adjusted where
necessary, to reflect the changing market conditions.

Interest rate sensitivity

Interest rate sensitivity of profit measures the effect of the assumed changes in interest rates on the net interest income for one
year, based on the interest-bearing financial assets and financial liabilities held at the year end. This includes the effect of hedging
instruments but excludes loan commitments. The sensitivity on equity is the impact arising from changes in interest rate on fair value
of investments in debt securities classified as FVOCI. Sensitivity to interest rate movements will be on a symmetric basis as financial
instruments giving rise to non-symmetric movements are not significant.

Based on the Group’s financial assets and financial liabilities held at the year end, an assumed 25 basis points increase in interest rate,
with all other variables held constant, would impact the Group’s profit and equity as follows:

2024 2023

Effect on Effect on Effect on Effect on

profit equity profit equity
KD 000’s KD 000’s KD 000’s KD 000’s

Currency Movement in Basis points

KWD +25 6,725 - 8,525 -

USD +25 4,455 - 5,548 -

EUR +25 56 - 305 -

GBP +25 1,139 - 788 -

EGP +25 257 (55) 366 (180)

191
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

28 RISK MANAGEMENT (continued)

28.3 MARKET RISK (continued)

28.3.2 FOREIGN EXCHANGE RISK

Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
foreign exchange rates.

Foreign exchange risks are controlled through limits pre-established by the Board of Directors on currency position exposures. In general
assets are typically funded in the same currency as that of the business being transacted to eliminate exchange exposures. Appropriate
segregation of duties exists between the treasury front and back office functions, while compliance with position limits is independently
monitored on an ongoing basis.

The table below analyses the effect on profit of an assumed 5% strengthening in value of the currency rate against the Kuwaiti Dinar
from levels applicable at the year-end, with all other variables held constant. A negative amount in the table reflects a potential net
reduction in profit, whereas a positive amount reflects a net potential increase.

2024 2023

Effect on profit Effect on profit

Currency % Change in currency rate KD 000’s KD 000’s

USD +5 1,222 (393)

GBP +5 338 (1)

EUR +5 (93) 38

Other +5 237 108

28.3.3 EQUITY PRICE RISK

Equity price risk is the risk that the fair values of equities will fluctuate as a result of changes in the level of equity indices or the value of
individual share prices. Equity price risk arises from the change in fair values of equity investments. The Group manages the risk through
diversification of investments in terms of geographic distribution and industry concentration. The table below analyses the effect of
equity price risk on profit (as a result of change in the fair value of equity investments held as fair value through profit or loss) and on
equity (as a result of change in the fair value of equity investments classified as FVOCI) at the year end due to an assumed 5% change in
market indices, with all other variables held constant.

2024 2023

% Change in Effect on profit Effect on equity Effect on profit Effect on equity

Market indices equity price KD 000’s KD 000’s KD 000’s KD 000’s

Kuwait stock exchange +5 104 22 82 32

Qatar stock exchange +5 130 - 177 -

UAE stock indices +5 539 - 366 -

Saudi stock exchange +5 1,008 206 999 220

NBK Annual Report 2024

28 RISK MANAGEMENT (continued)

28.4 OPERATIONAL RISK

Operational risk is the risk of loss arising from inadequate or failed internal processes, human error, systems failure or from external
events. The Group has a set of policies and procedures, which are approved by the Board of Directors and are applied to identify, assess
and supervise operational risk in addition to other types of risks relating to the banking and financial activities of the Group. Operational
risk is managed by the operational risk function, which ensures compliance with policies and procedures and monitors operational risk
as part of overall global risk management.

The Operational Risk function of the Group is in line with the Central Bank of Kuwait instructions dated 14 November 1996, concerning
the general guidelines for internal controls and the instructions dated 13 October 2003, regarding the sound practices for managing and
supervising operational risks in banks.

29 CAPITAL

A key objective of the Group is to maximise shareholders’ value with optimal levels of risk, whilst maintaining a strong capital base to
support the development of its business and comply with the externally-imposed capital requirements.

The disclosures relating to the capital adequacy regulations issued by Central Bank of Kuwait (CBK) as stipulated in CBK Circular
number 2/RB, RBA/336/2014 dated 24 June 2014 (Basel III), and its amendments, and the Leverage regulations as stipulated in CBK
Circular number 2/BS/ 342/2014 dated 21 October 2014, and its amendments under the Basel Committee framework are included
under the ‘Risk Management’ section of the Annual Report.

Capital adequacy, financial leverage and the use of various levels of regulatory capital are monitored regularly by the Group’s
management and are, also, governed by guidelines of Basel Committee on Banking Supervision as adopted by the CBK.

The Group’s regulatory capital and capital adequacy ratios (Basel III) are shown below:

2024 2023
KD 000’s KD 000’s

Risk-Weighted Assets 27,601,723 26,469,664

Total Capital required 4,140,258 3,970,540

Total Capital available

Common Equity Tier 1 Capital 3,639,713 3,442,577

Additional Tier 1 Capital 534,221 531,776

Tier 1 Capital 4,173,934 3,974,353

Tier 2 Capital 611,765 597,889

Total Capital 4,785,699 4,572,242

Common Equity Tier 1 Capital adequacy ratio 13.2% 13.0%

Tier 1 Capital adequacy ratio 15.1% 15.0%

Total Capital adequacy ratio 17.3% 17.3%

193
3 Financial Statements

Notes to the Consolidated Financial Statements (continued)

31 December 2024

29 CAPITAL (continued)

Total capital requirement as at 31 December 2024 is 15% (31 December 2023:15%) including capital conservation buffer of 2.5% (31
December 2023 :2.5%).

The calculations include Boubyan Bank K.S.C.P., an Islamic Banking subsidiary. For purposes of determining risk-weighted assets and
capital required, exposures and assets at Boubyan Bank K.S.C.P. are risk weighted, and capital charge calculated, in accordance with
Central Bank of Kuwait regulations applicable to banks providing banking services compliant with Codes of Islamic Sharia’a. Those
figures are then added to corresponding figures pertaining to all the rest of the Group, identical with the treatment in relevant reports
submitted to the Central Bank of Kuwait.

The Group’s financial leverage ratio is calculated in accordance with CBK circular number 2/BS/ 342/2014 dated 21 October 2014, and
its amendments is shown below:

2024 2023
KD 000’s KD 000’s

Tier 1 capital 4,173,934 3,974,353

Total exposures 44,052,478 40,989,808

Leverage ratio 9.5% 9.7%

30 FUNDS UNDER MANAGEMENT

The Group manages a number of funds, some of which are managed in association with other professional fund managers. The funds
have no recourse to the general assets of the Group and the Group has no recourse to the assets of the funds. Accordingly, the assets
of these funds are not included in the consolidated statement of financial position. As at 31 December 2024, funds under management
were KD 7,654 million (2023: KD 6,600 million).

NBK Annual Report 2024

195
Group Directory

HEAD OFFICE CONSUMER BANKING GROUP Treasury Group Information Technology Group
Ext: 3567 Ext: 3797
Al Shuhada Street, Sharq Retail Banking
P.O.Box: 95, Safat Ext: 2053 Group Risk Management Group Financial Control
13001 Kuwait Ext: 2321 Ext: 3009
Tel: +965 2229 1111 Domestic Branches
Fax: +965 2229 1444 Ext: 3250 Economic Research Group Executive Office
Ext: 3136 Ext: 2230
Direct Sales
Ext: 5003 Legal Affairs Group Public Relations
Ext: 3091 Ext: 3166
Consumer Lending
Ext: 3374 Human Resources Media Relations
Ext: 5162 Ext: 2789
Marketing
Ext: 3507 International Banking Group Advertising
Ext: 2665
Consumer Credit Collection Regional Institutional Banking
Ext: 2305 Ext: 5328 Group Internal Audit
Ext: 5405
Private Banking Group Please refer to international
Ext: 2553 network for a complete listing

Domestic Corporate Banking Operations Group

Ext: 2373 Ext: 3354

Foreign Corporate, Oil and

Trade Finance Group
Ext: 2307

NBK Annual Report 2024

Local Branches

Ahmad Al-Jaber Farwaniya Qadsiya

Ahmadi Fintas Qortouba
Airport T1 Ghazali Qurain
Airport T4 Grand Avenues Plaza Ras Al-Salmiya
AIU - Self-service Branch Hadiya Rawda
Al-Rihab Hamra Tower Riqqa
Al-Rumaithiya Hawally Saad Al-Abdullah
Ali Sabah Al-Salem HQ Sabah Al Ahmad
Andalus Jabriya Sabah Al-Nasser
Ardiya Jahra Sabah Al Salem
Avenues Jahra Commercial Sabahiya
Bayan Jleeb Shuyoukh Sabhan
Boursa Kuwait Airways Head Office - Self-service Branch Salwa
Cinema Salmiya Kaifan Shamiya
Dahiyat A. Salem Khairan Hybrid Outlet Mall Sharq
Daiya Khairan Square - Self-service Branch Shuwaikh
Dasma Kheitan Shuwaikh Medical
Doha KNPC Siddiq
Edge Mall - Self-service Branch KOC Sour
Eqaila Ministries Complex South Surra
Fahad Al-Salem Mishref Surra
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Faiha PIFSS

Head Office Tel.: 2229 1111

Call Center Tel.: 1801801

For More Information About National Bank of Kuwait:

197
International Branches

Bahrain United Arab Emirates Lebanon Egypt

National Bank of Kuwait SAKP National Bank of Kuwait SAKP National Bank of Kuwait National Bank of Kuwait - Egypt
Bahrain Branch Dubai Branch (Lebanon) SAL SAE
GFH Tower Block 346 Latifa Tower Sanayeh Head Office Plot No. 155, City Center
Road 4626, Building 1411 Sheikh Zayed Road BAC Building, Justinian Street First Sector 5th settlement
P.O. Box 5290, Manama P.O. Box 9293, Dubai, U.A.E P.O. Box 11-5727, Riad El-Solh P.O. Box 229
Kingdom of Bahrain Tel: +971 4 3161 600 1107 2200 Beirut, Lebanon Postal Code 11835
Tel: +973 17 155 555 Fax: +971 4 3888 588 Tel: +9611 759 700 New Cairo, Egypt
Fax: +973 17 104 860 Fax: +9611 747 866 Tel: +202 26149300
Abu Dhabi Branch Fax: +202 2613 5864
Saudi Arabia Sheikh Rashid Bin Saeed Street Bhamdoun Branch
National Bank of Kuwait SAKP Al Maktoom Road Tel: +961 5 260 100 United Kingdom
Jeddah Branch (Old Airport Road) Fax: +961 5 260 102 National Bank of Kuwait
AI-Khalidiah District P.O. Box 113567 (International) PLC
AI-Mukmal Tower Abu Dhabi, U.A.E Iraq Head Office
P.O. Box 15385 Tel: +971 2 4199 555 Credit Bank of Iraq NBK House, 13 George Street,
Jeddah 21444 Fax: +971 2 2222 477 Head Office London, W1U 3QJ, UK
Saudi Arabia Street 9, Building 187 Tel: +44 20 7224 2277
Tel: +966 2 603 6300 NBK Capital Partners Limited - (Elwiya Building)
Fax: +966 2 603 6318 DIFC, Dubai Sadoun Street District 102
Precinct Building 3, Office 404 P.O. Box 3420
Dubai International Financial Baghdad, Iraq
Centre Tel: +964 1 7182198/ 7191944
P.O. Box 506506, Dubai, U.A.E
Tel: +971 4 365 2800
Fax: +971 4 365 2805

NBK Annual Report 2024

France China Kuwait
National Bank of Kuwait France National Bank of Kuwait SAKP Watani Financial
SA Shanghai Branch Brokerage Co
90 Avenue des Suite 1501-1502 Abdullah Al-Ahmed Street
Champs-Elysées AZIA Center AI-Naqi Building, Office 17
75008 Paris, France 1233 Lujiazui Ring Road P.O. Box 21350
Tel: +33 1 5659 8600 Shanghai 200120 Safat 13074
Fax: +33 1 5659 8623 China Kuwait
Tel: +86-21-8036-0800 Tel: +965 2259 5102
Singapore Fax: +86-21-8036-0801 Fax: +965 2224 6979
National Bank of Kuwait SAKP
9 Raffles Place #44-01 United States of America NBK Capital
Republic Plaza National Bank of Kuwait SAKP NBK Headquarters
Singapore 048619 New York Branch Al Shuhada Street
Tel: +65 6222 5348 299 Park Avenue, 17th Floor Block 6, Sharq
Fax: +65 6224 5438 New York, NY 10171 P.O.Box 4950
USA Safat 13050 Kuwait
Tel: +1 212 303 9800 Tel: +965 2224 6900
Fax: +1 212 319 8269 Fax: +965 2224 6905

199
National Bank of Kuwait
(S.A.K.P)

P.O.Box: 95 Safat, 13001, Kuwait

Tel: +965 22291111
[email protected]
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